Sales Tax

[matt_k1]

I have been doing part-time freelance gigs for a couple years now. Nothing big or serious. Just started

doing weddings this year. Never charged sales tax and just absorbed the cost since it hasn't amounted to

much so far. But yes, I am reporting my income (actually taking the loss and the write-offs at this point).

I am registered as a sole-proprietor in San Francisco, but also have a day job.<p>

With weddings now, taxes are becoming a significant thing and I know I need to start tacking it on. My

question is how & when do you let potential clients know that there will be tax added to your wedding

package prices... or do you just roll the taxes into your rates? I just met with a couple and for the first

time mentioned that the package price doesn't include tax. I think they were a little surprised that I even

brought up taxes. Is that unusual or is it just that some people assume photographers are exempt or

something?

[abby_lorenzo]

Since you are a freelancer and not an employee, the services you provide are subject to sales tax on top of the asking price. I'll give you a good example of how I better understood the concept. When I go get my haircut, my hairdresser provides me a service. The price of my haircut let say is $90.00. It is understood that when I go to the front desk to pay for my haircut, I will be charged sales tax above the quoted price. The taxes you charge over and above the asking price is what you declare to government at the end of the year. To avoid any assumptions from your potential clients, note it in the document when you provide them your quote. If they don't agree with it then it is totally up to you whether you want to shoulder that amount and have it deducted from your asking price. Either way you will have to pay that amount to the government at the end of the year. I don't think that you would like to get paid less than you deserve just because the client assumes incorrectly.

[kari douma]

I used to say my prices included sales tax. Then, when I started paying thousands of dollars in sales tax, I decided I didn't want to foot the bill any more. So, I changed all my info to state that my prices do not include sales tax. It is on my website, on my brouchures, and in my contracts. I don't even mention it to the customers, until it comes time to pay their bill. I say, "Your package is $XXXX, and with sales tax that makes $XXXX. So, today you owe half, which is $XXXX." I have never had anyone even bat an eye over it.

[barry_davis___st._louis__m]

Sales tax is a state by state issue. You need to check with your State revenues office. In Missouri, if a photographer charges for time and service and has that differintiated from "product" then that cost isn't taxable (sales tax), but the income generated from "product" is.

[buckry]

Indiana is the same way. Charging a customer tax on services is totally optional, but it's required on products. So when I used to do everything ala carte I would get my sitting fees and not collect tax, but when they placed an order for enlargements, the tax was always added on to that. Now that I'm doing most of my work in all inclusive packages I'm charging sales tax on the whole job.

[kelly_flanigan1]

<a href="http://www.boe.ca.gov/sutax/pam71.htm"><b>The experts are in Sacramento. :)</b></a> In California the sales tax rates can vary higher in certain areas than the base rate of 7.25 percent. There can be 2 or 3 tax districts, and using your zip code alone doesnt always work. <BR><BR>If you dont charge enough you are responsible for the back taxes, penality, and interas on both. Figure TWICE the tax.<BR><BR> Thus when Joe Six Pack wants to use his "tax id number" to skirt the sales tax, YOU will pay say 16 percent say three years from now on that 2000 dollar wedding, plus be raked over the coals for good measure. Having gone thru several California audits myself, you should just charge customers the legal tax, and avoid future headaches and lost time due to an audit. Figure say 25 percent then if you include your time wasted and lost photography work.<BR><BR> Contractor types will give their business tax id, fisherman their boat trailer id as tax numbers, retired folks their dog 's collar id. <BR><BR>ALL the few "tax id numbers" I let slip thru got caught, and I paid the taxes later. <BR><BR>Folks will lie thru their teeth, and get you to hold the sales tax bag. Figure NEVER being able to get a red cent from them when you are audited. Once audited and you are caught, you are on the cheater list. <BR><BR><BR><BR>Folks will try to pay you with an out of state check, have you deliver the prints outside California, to skirt the sales tax. Their gola is to get YOU to hold the bag, to save them money. Its in their blood, their DNA.<BR><BR>The drab unhumorous auditors get excited when these gross infractions are found, and search for more gold/money to collect.

[kelly_flanigan1]

California also has you paying sales taxes on your camera gear, film too bought out of state. Albums that are resold can be none taxable to you when you buy them for resale. These auditors are abit of a different group, and can kick in with a State income tax audit, or a joint Fed/Calif audit of both. When my business was caught in Calif the B&W paper I used for prints I sold wasnt taxed, but the chemicals were once, and not in another audit. Thus if you buy thousands of dolalrs worth of consumables from out of state to skirt paying sales taxes on YOUR purchases, figure getting busted if you are a big fish, and going maybe under their radar screen if a small fry. Folks who have not been raped and racked over the coals on this issue will say to ignore these taxes.

[shannon k]

Along these lines, I need to start investigating what NC charges tax on -- goods only or goods and services. And whether or not what I provide is considered "goods". (I take the photos and give them the files on CD -- no prints.)Anybody know which department of the state gov't I need to contact for the answer?

[merle_white]

Matt,

 

I think you are more concerned about it than the clients are. Clients expect to pay sales tax, it's part of life. Remember every other legitimate vendor at their wedding is charging sales tax for the product and services they provide.

 

 

Good Shooting to Ya !!

 

Merle

[ptn4egl]

Services in California are considered non-taxable. Your "creative fee" and all time spent scheduling, producing prints, editing ,etc is considered non-tangible.

<P>

Physical products delivered to your customers/clients are taxable at the various rates around the different districts.

<P>

Here's an example: (assuming your business is in SF)<BR>

$2000 to shoot a wedding. Just to shoot, no prints, etc.<BR>

You sell $500 in prints and mail them to your customer in SF<P>

 

sales tax is charged on the $500. State, local, and district rates.

<P>

Now, if your customer lives in San Mateo and you mail the prints to them. You still collect sales tax, but a different rate. Only state and local rate, again ONLY on the $500 of physical goods you sold them.