Wedding Photography and Sales Tax

Being new in the wedding photography business, I try to minimize all expenses including bookkeeping. Thanks to my previous experience I could do my own books in QuickBooks and use a CPA for annual tax return only. However; the sales tax seemed to be the biggest question mark, therefore, last month, I signed up for a free seminar on Sales and Use tax by Georgia Department of Revenue.

Here are the questions I had and the answers by one of their business analysts. Off course, the following is valid for Georgia, but I hope someone here might find them useful.


1. Q: I heard that small private businesses do not need to charge sales tax. Is that true?
A: No. Any entrepreneurial activity creating tangible personal property is subject to Georgia sales tax.

2. Q: Do I need to charge a sales tax from “shoot and run” wedding photography package i.e. when only digital files are delivered on a DVD?
A: The nature of photography classifies it a service that creates that creates tangible personal property; therefore, it is subject to Georgia sales tax. Photography is not subject to Georgia sales tax when the photos are delivered electronically or to a customer in another state.

3. Q: Our studio is in Paulding County but I’m sending an album to a client in Cobb County. Should I apply Cobb County sales tax of 6% or 7% of Paulding County?
A: You should collect the tax based on the rate of the county in which the customer takes possession of the item. Based on the information provided, you should use the sales tax rate for Cobb County.

4. Q: I have a client from Idaho having her wedding in Georgia. The wedding will be photographed here, but the final photography products will be sent to Idaho.
A: Georgia sales tax would not apply if the items will be delivered to a customer in another state even if the wedding is photographed here.

5. Q: I use FedEx or USPS to deliver prints and/or albums. I charge flat $15 shipping and handling fee. Do I need to collect sales tax?
A: The shipping fee is taxable if it is part of a taxable sales transaction. If the items are delivered to a customer in Georgia, sales tax would apply to the entire amount, including shipping and handling.

6. Q: I photograph weddings sometimes as a second photographer for another studio that has its own contracts with their clients. After such wedding I deliver a DVD with digital files only to the studio. Then they will process the files and make albums and/or prints for their client. Do I need to charge them a sales tax?
A: The transaction between you and the studio is not taxable since the studio is essentially purchasing the photos from you for resale. You should obtain an ST-5 Exemption Certificate from the studio as documentation of the sale.

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Slava Slavik

You mean even sub states have their own tax systems......I really do not envy you...

Over here we only have two choices, VAT or no VAT.

If you make over 60K turnover you have to charge VAT.

Good luck with your sales tax returns!

mcmadkat wrote in post #4050078
You mean even sub states have their own tax systems......I really do not envy you...

Well, US sales tax system is a bit more sofisticated, but unlike in Europe our sales tax is one digit number in almost all states. As far as I remeber, VAT in Europe averaged at 20%.

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Slava Slavik

Taxation is not that difficult of a topic one you understand a few basic concepts. These apply to ANY state, and to any province in Canada and the US.
The first if TPP (tangible personal property) is taxable. All you need to understand is that the service of taking photos for someone is not taxable, but selling them something tangible (prints, books, etc) is taxable. All states/provinces will have varying rules on how to tax things if you are combining taxable and non-taxable together. Rather than trying to learn all the rules, the easiest solution is to keep the seperate. that way you only have to tax tangible goods and not need to worry about doing things in a way that makes something non-taxable taxable. Shipping charges being taxable follows the same guidelines as TPP so you don't need to learn anything special with that.
Making sales out of province/state. You don't charge your taxes on the sale, and it is up to the client to voluntarily submit their taxes to their state/prov. (not your issue). the reason you don't do this is that really you would charge the taxes and remit them to your state, and the buyer would apply for a tax credit to get the taxes back. This creates a net amount of taxes to your state of 0, yet they had to do a bunch of work for nothing. So that is the reason they just make it that you don't need to collect them for out of state sales.

Basically read the 2 concepts I just mentioned above and you will have a solid understanding rather than needing to learn the answers to multiple questions that all relate to the same thing.

Here in New Mexico, we don't have "sales taxes" we have "Gross receipts taxes" which makes life fun, and interesting.

"The gross receipts tax rate varies throughout the state from 5.125% to 7.875%. The total rate is a combination of rates imposed by:
The State
The county
The Municipality"
http://www.tax.state.n​m.us/oos/GrossReceipts​TaxFAQ.pdf

Always did love a challenge...
Btw.. it's not just tangible goods, but intangible services that are taxable as well...

In Kansas, we have to apply sales tax for the service too (session fee + sales tax)

You guys just have more taxes, in canada govt tax and provincial tax, usually adds up to around the (7% and 8%, when I was last in Ontario) 14 - 18 % mark....VAT is 17.5%.
Rather than having just one tax law, you guys go and have one for each state plus one underlying tax for the country.....seems daft to me not sophistcated.

gheesom wrote in post #4054663
VAT is 17.5%.

It is in the UK, but the rate is different for other EU countries - 20% in Italy for example.

I used to moan about doing my UK VAT returns, and the 'complicated' rules especially when supplying products to other countries, but it looks like we've got it easy compared to the US!

Rob

Yup we sure do have it a lot easier, especially when I hit the Quickbooks VAT report.... takes, oh at least 7 seconds to fill out my VAT return....

Very nice read...thanks, ill bookmark this thread

We have the same situation here in Ohio. - Stu

Kai wrote in post #4053821
In Kansas, we have to apply sales tax for the service too (session fee + sales tax)

mikep00 wrote in post #4050499
... All you need to understand is that the service of taking photos for someone is not taxable, but selling them something tangible (prints, books, etc) is taxable.
...
Basically read the 2 concepts I just mentioned above and you will have a solid understanding rather than needing to learn the answers to multiple questions that all relate to the same thing.

The main reason I went to the before mentioned seninar was to confirm this point of view. Yes, I was thinking that I could split a wedding package price to hours of photography coverage and then the prints. The sales tax would be charged from the prints only.

Well, from what I learned at the seminar I can't split a package because the photography time is a part of process creating the tangible property.

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Slava Slavik

Yup - basically that's what my tax pro told me when they decided to change the law in Ohio some years back. In some ways it's actually simplified my life .

slava-slavik wrote in post #4056073
.....Well, from what I learned at the seminar I can't split a package because the photography time is a part of process creating the tangible property.

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Slava Slavik