taxes

emeraldrose

SO I'm pretty sure I know the answer to this question, but it's been a VERY long and emotional day and so I can't seem to focus enough to find the answer.

As a business do we only collect taxes on prints/products we sell or on our services too?
if it helps I'm in SC but I have a federal EIN too.

Cygnus Studios

emeraldrose wrote:

SO I'm pretty sure I know the answer to this question, but it's been a VERY long and emotional day and so I can't seem to focus enough to find the answer.

As a business do we only collect taxes on prints/products we sell or on our services too?
if it helps I'm in SC but I have a federal EIN too.

You really need to get this answer from your accountant.
Different states have different rules for what if any services are taxed. Some states actually state "products or services"

One thing that I have found, that if you do charge a tax for the service and pay that tax to the state they are just as happy even when you did not have to charge the tax.

ChatKat

Different for every state and county
Sales tax is different for every state and sometimes city and county. Check with your local accountant or your chamber of commerce can point you to the sales tax authorities where you live.

emeraldrose

thanks, just so confusing sometimes.

sweet caroline

Varies depending on local laws. Where I live, I have to collect taxes on any session that results in the sale of images, whether they are in print or digital, even if I sell the prints online through smugmug or send the digital images electronically. So, theoretically, if I clients pays for a session only, and doesn't like the images, I don't have to collect tax on the session. I found all the info for my state and county online.

Angelo

sweet caroline wrote:

Varies depending on local laws. Where I live, I have to collect taxes on any session that results in the sale of images, whether they are in print or digital, even if I sell the prints online through smugmug or send the digital images electronically. So, theoretically, if I clients pays for a session only, and doesn't like the images, I don't have to collect tax on the session. I found all the info for my state and county online.

This seems convoluted and possibly the result of an institutionalized misunderstanding of the nature of third party sales by your state's tax revenue department.

What if your client pays for their session but does not buy prints but at some distant future date goes online and orders from your Smugmug account?

emeraldrose

SO I finally got a hold of someone after calling 3 different numbers at least 4 times ea. But the guy I talked to was really helpful and nice.

so for sc like your states I have to charge tax on the gross procedes of the sale. so even if it's 2 different bills billed at 2 different times, but prints come out of one of those bills then I have to tax all of it. So I've decided to just charge tax on everything to cover my butt.

Also for anyone also learnign the ropes DON"T forget USE tax. for when you buy something from out of state and don't get charged tax and you don't resell and charge tax (so promotional items, equipment...) you have to still pay local sales tax on the cost. So the 12 rep cards I buy even though I gift them away I have to pay tax on them locally since i wasn't taxed by the company. Lord it's a lot to run your own business and keep up with all of this.

while I can't be sure of all states, i'm pretty sure the use tax goes for all states and i read it's one of the biggest tax problems small businesses have.

ChatKat

Yes! Use Tax!
Yes, I actually posted something on facebook today to that effect.

The number one reason small businesses get audited is they buy goods out of state and don't report them on their sales tax returns. With all the budget issues, sales and use tax are going to be heavily enforced.

If you buy any thing for your business - from sample goods to frames to albums and prints or supplies and gear, you are required to report it on your sales and use tax returns so that you do pay tax on those items.

I hear all the time that people want to buy from B&H or Adorama so they don't have to pay sales tax. I know a few photographers who have paid dearly because they bought stuff and didn't report it.

emeraldrose

ChatKat wrote:

Yes, I actually posted something on facebook today to that effect.

The number one reason small businesses get audited is they buy goods out of state and don't report them on their sales tax returns. With all the budget issues, sales and use tax are going to be heavily enforced.

If you buy any thing for your business - from sample goods to frames to albums and prints or supplies and gear, you are required to report it on your sales and use tax returns so that you do pay tax on those items.

I hear all the time that people want to buy from B&H or Adorama so they don't have to pay sales tax. I know a few photographers who have paid dearly because they bought stuff and didn't report it.

i was reading the us dep of rev and evidently EVERYBODY even none business owners are supposed to pay use tax, don't know if that's new or not, but who knew?

emeraldrose

question- didn't think to ask about this, so thought one of you would know. Use tax, that's only for tangible items right? now for things like our smugmug subscription or other website hosting or domain fees right? thanks just going back through my records and figuring out how much taxes I owe considering this use tax thing.

ChatKat

Depends
For services out of state there is generally no use tax but you should check with local tax people. Use tax is for Tangible goods - anything you can see or touch.