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Do I have to charge sales tax for this?

by warscout11
8 replies
So I've started a method of going to local businesses, taking pictures of the premises, and putting together a 2 minute youtube video for them. I'm putting together the sales presentation, and I want to charge $297 (prices ending in 7 are suggested by people on here).

My question is, I'm going to use the Paypal here card reader, but what is the total amount I should charge? I'm in the USA and I live in the same state of this local business. Do I charge them $297 plus sales tax? Do I charge $297 total and then pay the sales tax out of my pocket? Do I have to charge sales tax at all? Same thing if I sold someone a mobile website, or a custom website for $3500. How does sales tax work? Thank you for any help you can give!
#charge #sales #tax
  • Profile picture of the author Tsnyder
    If I knew what state you lived in it would be easier to
    answer but what you need to do is call your state sales
    tax agency... probably called the department of revenue...
    and ask them.
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    If you knew what I know you'd be doing what I do...
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  • Profile picture of the author Andrew H
    Charge your price +Tax. People expect taxes, don't worry about that ruining a sale (only things guaranteed in life are death and taxes). If anything not charging taxes makes you look less credible, unless you explicitly state no tax is part of your deal (ie: discount).
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    • Profile picture of the author AprilCT
      All the states have different ideas of what should be taxed and the few things that aren't and can be different dependent on what county or city where you live or work. Your business needs compliance with all the laws of all the jurisdictions where you live, work and are subject to.

      Be ready to answer questions such as the types of work that are done on and off the internet as even that can make a difference.

      It's not just the state you need to ask if those services and products are taxable, it's all the rest of the taxing bodies as well. Just because some services might not be taxable, it doesn't mean yours will not.

      Do you have an accountant for your biz that could give you proper and lawful answers? An attorney who specializes in tax in your area? Laws are very difficult to read yourself and you need to get correct answers the first time around.
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    • Profile picture of the author Tsnyder
      Originally Posted by mcflause View Post

      Charge your price +Tax. People expect taxes, don't worry about that ruining a sale (only things guaranteed in life are death and taxes). If anything not charging taxes makes you look less credible, unless you explicitly state no tax is part of your deal (ie: discount).
      You don't charge taxes simply because people expect to pay them.

      You charge taxes because some taxing authority requires it... if none
      do and you add an entry to an order designated as taxes you will find
      yourself in serious trouble when someone finally questions it... and someone
      will... count on it.
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      If you knew what I know you'd be doing what I do...
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      • Profile picture of the author Andrew H
        Obviously the OP needs to know his local tax laws, that should go without saying. Know what state/federal taxes apply to your services (First, find what classification your services fall under). In general most services are going to be taxable (under state or federal, or quite possibly both).

        If you collect taxes on something that you shouldn't have, and then remit those taxes to the gov't I highly doubt they would come after you with the iron fist of the law (no malicious intent). Worse case scenario at tax time your accountant informs you that you collected taxes on a non-taxable item and you need to refund that to your clients. If you don't collect taxes on something you should have, then your in the position of having to pay them out of pocket at year end or going back to the clients and asking for them to pay extra taxes (which nobody would like, including me).

        So the most efficient way of doing things is to call your tax authority and ask them what taxes apply to your service, or just look up the info online. If you can't find what category your services fall under you might have to contact a tax lawyer.

        Good luck with the new business.

        Originally Posted by Tsnyder View Post

        You don't charge taxes simply because people expect to pay them.

        You charge taxes because some taxing authority requires it... if none
        do and you add an entry to an order designated as taxes you will find
        yourself in serious trouble when someone finally questions it... and someone
        will... count on it.
        Signature
        "You shouldn't come here and set yourself up as the resident wizard of oz."
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  • Profile picture of the author kindsvater
    You need to check with your particular state. Most locations have historically only charged sales sales for the sale of tangible personal property.

    But this can get complex fast and have unexpected results when the Internet and electronic commerce is involved, layered on top of politicians deciding what is taxed and what is not taxed.

    I was looking at Indiana rules and see these examples:

    - Photos placed on flash drive and given to customer are taxable because the flash drive is tangible personal property.

    - Photos sent to customer via email are not subject to sales tax.

    - Video sent to customer vie email is subject to sales tax because video is a specified digital product that is taxed.

    .
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    • Profile picture of the author warscout11
      So I'm in Michigan, legality-wise I need to find out if I need to pay the sales tax. From a sales point of view, if I have it priced at $297, is it better to include the tax already in there? Or like someone else said, maybe they expect to pay the tax in addition to that price?

      And also for something like Willr's restaurant email list method. If i'm charging $197 per month for my email service, does that include tax, or is tax extra? When they are invoiced via paypal, should I have paypal collect tax in addition to that?
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      • Profile picture of the author kenmichaels
        Originally Posted by warscout11 View Post

        So I'm in Michigan, legality-wise I need to find out if I need to pay the sales tax. From a sales point of view, if I have it priced at $297, is it better to include the tax already in there? Or like someone else said, maybe they expect to pay the tax in addition to that price?

        And also for something like Willr's restaurant email list method. If i'm charging $197 per month for my email service, does that include tax, or is tax extra? When they are invoiced via paypal, should I have paypal collect tax in addition to that?
        never ...ever make a sale unless the buyer understand completely, the entire fee.

        as in, if your charging 197 + tax... then they really need to know it. before purchase.
        other wise ... you might be spending your next vacation at club fed.

        or paying a big fine.
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