Taxes? New commercial photographer in California

Hi,

 

I'm starting a part time commercial photography business, and know little about how to pay taxes.

 

I know I need to charge clients .0775% sales tax.

I know I don't need to charge sales tax for shoots with electronic, non-tangible delivery (according to APA)

I plan to buy QuickBooks, but don't know how to use it yet.

I plan to do between $5000 - $15000 in my first year.

 

So when the client pays me an invoice, including sales tax, I keep that money until tax time comes along and I have to file and pay just

like I would with my personal income taxes?

 

As someone doing such a small amount of business, should I get an accountant to do my taxes? I'm a big do-it-yourselfer, and I've

always done my personal taxes.

 

Could/should I do my own business taxes?

Will Quickbooks do them for me?

Do I need to do my taxes quarterly, or annually?

 

Also, since it's my first year of business, and I've spent $15,000 on equipment, software, etc, will my profit be $0 and will I not have to pay

any taxes? I'm just curious how much $ I really need to save for taxes.

 

Thank you for any help.

Contact the State Board of Equalization for the real scoop on collecting state and local sales tax. Do not take it from anyone on the internet to tell you to do Ca. sales tax.

 

I suggest that you need professional advice beyond the level of "I've always done my own taxes"

 

<Chas>

Sales tax and state and federal income tax are three different animals. The sales tax is paid weekly;monthly; or later depending on what limb of the tree you are on; the dough collected. Having been audited myself in Calif once or twice I recomend you get an accountant; unless you like to be keel hauled with an audit; or are well lubed. They are a dry lot; your mistakes and assumptions are like chumming for sharks with raw meat. Lets say you bought a lens out of state to skirt Arnold. An audit can have one paying the CA tax on the NYC item; PLUS the penality; PLUS the interest; ie FUN stuff. Small fries are under the radar more than a bigger outfit; thus an audit sounds trivial; like a fun day at Magic Mountain or Disneyland. Its welll worth it to have a professional accountant review your ideas; or do all you work; to reduce audits.

And, to add to Charles Webster's answer, don't take definitive advice about choice of entity or your particular situation in regards to income taxes and accounting from anyone on the internet. You should contact a tax professional, and consult with him or her for about an hour to get started on the right foot. Obviously, I would recommend a CPA.

 

For a referral, ask your friends or family who they use. I usually don't charge for an initial consultation of a half hour or less, if I believe I'm going to get business from the meeting. Sometimes that pays off, other times it doesn't. Be sure to ask in advance what the TP's charge will be, or at least their hously rate.

 

Paying a little bit before you get too far into business can save you money later on. Good luck with your new business.

 

Joel Berry, CPA - Sugar Land, Texas

I strongly suggest you consult a tax accountant. I buy and rent equipment to my clients and charge separately for my services

and my tax returns are something like 60 pages. Some purchases you need to depreciate, some not.

 

And you may be eligible to open a SEP IRA and an accountant's advice will probably pay for itself. You might even want to

incorporate so you don't loose your house to an angry bride and groom after your camera malfunctioned.

 

I think you get the idea...

Hi Josh,

 

First off, only take the advice of the IRS, State Board of Equalization, your county and/or city tax board, and your hired CPA and/or tax accountant AS A MATTER OF FACT. All other advice you received should be verified through one of the above, and documented by you as to who said it was OK.

 

That said, the sales tax varies by county. On county may be .075 and the one next to it can be .0775 and the next one .07375. There is a base state in there plus whatever the county/city has decided to add on. CA also "sales and use" taxes things that other states don't. You can find specific info at their web site http://www.boe.ca.gov/.

 

You will file AND PAY "sales and use" tax collected on a periodic basis throughout the year.

 

Take a look at there California City and County Sales and Use Tax Rates at http://www.boe.ca.gov/sutax/pam71.htm.

 

You will also want to read Tax Tips for PHOTOGRAPHERS, PHOTO FINISHERS, AND FILM PROCESSING LABORATORIES at http://www.boe.ca.gov/pdf/pub68.pdf.

 

If you have questions, call your city office, your county office, and the BOE and just ask.

 

As for the $15K equipment expense versus the $5K to $15K first year, you need to tax pro that understands business start ups and tax law.

Notice that everyone is responding pretty much the same way?

 

Everyone is telling you to hire a CPA and get the right answers locally. I agree! Do not rely upon us here online

for good and complete info.

 

The requirements vary from state to state and even municipality to municipality (my sales tax rate, also in Calif.,

is 8.25%).

 

A photographer friend of mine "self-interpreted" California sales tax laws... He ended up having to get a

$600,000 loan on short notice pay the back taxes and fines that were the result. His studios survived, but it was

pretty touch and go for a few years.

 

Do not... I repeat... DO NOT screw around with this. Hire a local CPA and do it right or it can cost you big time!

Well I guess my answer is clear. Thank you for all the help.