Do freelance graphic designers deal with sales tax?
If so, how is it applied?
This is an international forum, so sometimes it’s necessary to say what country’s laws you’re referring to.
Even with the assumption that you’re referring to the United States, there is no definitive answer to your question since there is no national sales tax. Sales taxes are imposed by the individual states. Every state has different laws regarding what’s taxed and what isn’t.
In some states, sales taxes need to be collected under certain circumstances but not others. For example, if graphic design is considered a service, it might not be taxable. On the other hand, if there’s a deliverable that the state doesn’t consider a service — like a finished website or printed materials — it might be taxable. Some states don’t have sales taxes at all. Others tax almost every end sale.
The best advice I have is to do some research on what your own state requires.
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The business will reside in the United States.
So, like details of a contract, should freelance graphic designers approach sales tax on a case-by-case basis since the deliverables or service provided depends on the project? For example: For one client I might provide and editorial layout. For another I might provide a logo for digital use only and for a third I provide design consultation.
Since I’m a moderator here, I can look up your IP number and the state from which it originates. If I post a link to the answer you’re looking for, it would give away that state. Are you OK with that?
no problem
Assuming your IP number points to the state from which you would be doing business, read this — especially the section titled Printed Advertising Material and Processing Services: https://www.state.nj.us/treasury/taxation/pdf/pubs/sales/anj18.pdf
Thank you. I’ll take a look.
In the quotes and contract, I include a line that says “State sales tax may be applied to products and services and is in addition to the quoted fees”.
Yeah, it will vary by state. Here in California, they require a sit down interview when you go to submit your business sales tax application. They ask questions about how you will be operating your business and then tell you which parts will require tax collection. They won’t give you a permit unless they are sure you understand what to do. They also have a hotline you can call with questions, and they offer free seminars on sales tax for people starting new businesses.
The tax laws recently changed, where you are expected to collect tax based on the location to which you are sending your taxable items. It created mayhem at first, especially if you are one state, your client in another, and the print vendor in yet a third.
South Dakota vs Wayfair.
There’s software out there to navigate this mess. I don’t know much about it as our accounting department handles it.
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