According to PhotoAttorney.com, one of the top mistakes that photographers make in their business practice is not charging sales tax for prints and products. At year end tax time, many photographers are surprised to find themselves hit by an unexpected tax bill.
Photographers who provide a “tangible product” need to collect sales tax from their customers for the service that produced that product.
What’s a “tangible product?” Many photographers are confused about this.
“If you hand over a CD, if you hand over a thumb-drive, if you hand over any thing that is tangible, you just sold a product and as such you have to pay sales tax on products that are sold,” he said.
“At the same time, if you are a photographer and you don’t give them a tangible product, and you just FTP all of the photos that you take for a wedding directly to the client, you’re not actually turning anything tangible over to them so you might not technically have to pay sales tax on the services that you provided.”
“When it’s photography as a service, where you are shooting for somebody else and you hand over just your data, you’re kind of like a wholesaler at that point, so you don’t need to be collecting tax.”
Hopefully none of you have had that nasty surprise this year; ShootProof makes it easy to input your state’s sales tax rate and we automatically add it to all purchases when you sell photography online. You can choose to apply tax only to customers in your state, or all customers, depending on the laws and regulations for which you are subject.
Another helpful resource about sales tax from Professional Photographers of America is here.