 E R |
Charging Sales Tax Just curious how everyone handles the sales tax issue? Do you charge it based on the total dollar amount of order placed by the client? Or by what it actually costs you to print the order? Just interested on what the standard procedure is - all responses are welcome! Thanks!
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- Gregory LaGrange Contact Gregory LaGrange Gregory LaGrange's Gallery |
sales tax should be whatever the state says the percentage of the sale should be.
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E R |
But, should the percentage be applied to the dollar amount the client pays to me? Or of the dollar amount that I pay to my lab? As with most studios, I charge more than my lab does for prints. That mark-up absorbs the cost of my time spent editing, retouching, cropping, etc. So, therefore, part of what they client is paying is for is a service and not a good. Which is why I'm not sure how to apply the sales tax percentage. I hope that makes sense.
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John Rhodes |
E.R. Stop and think a moment. When you buy from a retail store, you pay tax on the amount of the sale; hence the term "sales Tax." You have no information as to what the item costs to produce, only what you paid for it. The time you spend "developing" the print is part of the cost of goods sold. In fact, your customers have no business knowing what it cost you to produce the photograph and matting, framing, etc. You set the price, they pay the sales price plus tax. Now, let me suggest another way to approach this. I sell through a fine art gallery. They take care of the taxes. However, I do the majority of my sales at art festivals. There, to avoid counting out change, I include the sales tax as part of the purchase price and calculate the tax owed at the end of the event (commonly referred to as "backing out the tax." If a print sells for $50, I collect $50 and back the tax out later. Makes it easier on me and my customers are happy. Hope this helps, John
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Mark Feldstein |
IMHO, the right way to approach this is to comply with the state revenue code requirements. In California merchants register with the State Board of Equalization, get a reseller permit and then charge sales tax and when purchasing resellable items or supplies, do that without paying sales tax on those items. For photographers, this generally becomes an accounting nightmare. How much tax paid on which item and then charging sales tax THEN reporting these figures to the state AND cutting them a check for what you owe them on a quarterly basis IMO is a REAL hassle. Remember ER, it's not just collecting the tax, you're essentially acting as an agent of the state and have to pay what you collect to the state after you collect it. So, to avoid that problem, I pay sales tax when I buy materials and I just get reimbursed from clients when I invoice them whether they're in California or not, assuming I've paid it. And if the clients are out of state, of course I wouldn't need to charge sales tax any way. If you really have sufficient sales to start charging tax or if your state law requires you to do that, get the info from the state agency charged with collecting it.
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