Okay, so I used to own a franchise (candy products) and had a store inside the mall. My accounting was pretty straight forward and I knew how and what to charge sales tax on..etc..
So I was thinking about photography. Right now I dont have a studio, but when I do portrait shoots, I want to be able to pay my taxes appropriately.
Then I was thinking about how to charge sales tax.... I have been charging sales tax on the products and session fee. Like if the person orders package A, I charge the appropriate amount of tax for that. Seems straight forward to me.
Well then I was thinking about when I order the printed products. I am paying taxes on those prints. When I had my candy business, I never paid taxes on wholesale items that I re-sold. Is it possible to get prints without paying tax on them (actually paying taxes twice?) I am ordering the prints for re-sale and not for personal use.
But the way it is now, I pay taxes on the prints I order for the client, and the client also pays taxes on those prints.
If you use the right lab you will not be charged taxes on your prints. You have to have your business ID number however for this.
First though I have to say, Photography is a service/product industry. Meaning.
Service, - The session/siting/shoot and the initial print purchases - all fall under the service heading.
Product, - Any prints purchased after the original prints have been purchased and any novelty or other 'product' items.
So in other words when a client comes in for their session and purchases X prints from the session it is all service. They call back a week/day/year later and want more prints than it is now a product because the service has ended.
Sales tax on all product sales.
If you want to add a 'handling' tax for the services you can, if you want more to cover yourself.
This is the basic.
If you want a real answer. Contact a Real Accountant.
Consult your State website for the agency which deals with sales/use taxes and get the particulars from them.
In California, you get a re-seller's license from the Board of Equalization, which lets you avoid paying sales tax on items you purchase and later re-sell to your customers -- you usually have to fill out a form at each vendor you purchase from.
Also, in California, tax is charged on (material) products but not services; if you invoiced them separately, you would not have to charge tax for the sitting/session, but would for the prints/files.
Your Tax ID number is for filing income/business taxes. You will probably have a completely separate number for the state agency which handles sales taxes.
If you are trying to run a profit-making photography business, I recommend investing in some of the self-help legal books from Nolo Press -- they have stuff on business, taxes, copyright, etc. Also, check with your library first -- they may have (or have access to) some of the titles.
Your Tax ID number is for filing income/business taxes. You will probably have a completely separate number for the state agency which handles sales taxes.
I didnt need a business license # in IA. But in AR I do. (I have filed)
But according to AR law ALL photography services are taxable. So looks like I need to tax on the session as well as the prints.
But according to AR law ALL photography services are taxable. So looks like I need to tax on the session as well as the prints.
At least that simplifies the invoicing! ;-)
yes it does. I just have to pay city tax and state tax for a whopping 9% total. (our city tax is 3%, higher than in Little Rock at 0.5%)
I dissolved my franchise business last year (since we moved out of state) and it was a pain, but looks like the photography business may be simpler since I am doing from home and only provide one type of service instead of 100's of products!
