Hi, I just moved to California and have a client for Branding design, my idea is to get a job in a couple of months after I finish the gig but now I find I might have to get a business license and even a saller’s permit to do this freelance. Any designers from California who can give me some counseling?
Is there a way I can do this freelance without establishing a business?
Do you charge your client sales tax when doing Branding? My idea is to use the 75% non taxable preliminary artworks and 25% taxable final artworks Method… Any of you using it?
I also moved to the US recently, have no experience freelancing here in the US.
Thank you for any advice.
I’m not from California, but I do enough work for California businesses to be somewhat familiar with the regulations. I think business licenses in California are handled at the city and county levels, not the state level, so if I were you, I’d give them a call.
As for sales tax, here’s a publication from the state that explains the rules for graphic designers.
Unofficially, if you’re only doing a one-off job for one client, I wouldn’t worry about it too much, but I’d still check into it to make sure.
Whew, Just B, I tried to read through that and man, I’m glad I don’t want to start a GD freelance in CA (though I bet my state reads much the same way, we’re the mini-CA on the East Coast.)
Freelancing is a business. I doubt the OP is going to give up freelancing on getting a job. They should perhaps look more into the laws of doing business if they are going to be doing business.
I’m in Los Angeles.
You need a business license from your city, a DBA (fictitious business name) registered with the county, and a seller’s permit from the state (CDTFA).
It’s also good to get a Taxpayer Identification Number from the Internal Revenue Service, so you can give that out in certain instances, rather than your Social Security Number. Since you are new to the US, I’ll mention that it’s common knowledge that you should be very careful about giving out your SSN. It’s one way that someone can steal your identity.
For state sales tax, become familiar with publication37 and publication73 from CDTFA.
At the end of the year you will need to file income tax forms with the Internal Revenue Service as well as with the state. You’ll have separate forms for both for personal income and business income. A tax preparer or accountant can assist you with those.
When you go to get the sales tax permit for the first time, they’ll interview you to make sure you understand reporting requirements. Some states rely on property taxes, but California relies heavily on sales tax. They’re very serious about accurate reporting.
That’d be a question for an accountant or tax preparer. I think I asked this of mine many years ago and the response was “Yes, but it’s a dumb way to do business, because you can’t deduct expenses which means you are going to pay a lot more in taxes.”
First spend some time working in someone else’s business so you can learn how business really works.
And as long as we’re on the subject of business taxes, there are also the quarterly estimated federal income tax payments. Being June 15 — a 2nd quarter deadline day — I just gave the federal government a bunch of cash today.
The tax laws in the country are absurdly complicated.
Thank you so much for the feedback! It helps a lot.
Thank you Just-B for the advice!