I'm going to ask my accountant this when I see him in a few weeks, but I'm trying to get QuickBooks set up sooner rather than later and ran into this question.

Previously when I've contracted a wedding and accepted a retainer, I've paid the sales tax on the amount of the retainer received that quarter. Then I've paid the sales tax on the balance when the rest of it is received. QuickBooks seems like it's wanting me to pay sales tax for the entire amount up front.

What do you all do?

Thanks!

Lori, as far as I know...theres no sales tax if your not selling anything tangible here in Florida. There is also no tax on photography services here in Florida. We do charge sales tax on the album however.

Someone please correct me if I am wrong, and if I am ......oh boy.....

In CA you have to pay sales tax on the whole package up front, not just the retainer. I would wait to set it up till you meet with your accountant so they can give you the specific rules for Florida.

Lori, this may help you.

http://dor.myflorida.com/dor/forms/2007/gt300015.pdf

I was curious myself to make sure we were doing the right thing...thank goodness we were! Long story short, no tax on photography services.

Nick, my packages include product (ie an album) so now I'm wondering if I have to charge sales tax on just a portion of my packages? (Is that what you're doing?) Argh, so confusing! The list of questions for the accountant keeps growing

Now that would definitely be a question for your accountant. The contract we have is itemized, and gives a break down such as album cost. So we just charge tax on the album price itself.

Thanks Nick!

Ugh, so does the state of Florida owe me my taxes back?! LOL! Both our county tax office and the SBDC accountant told me TO tax all services and products....*SIGH*

Ugh, I know. I've been taxing everything. Can you imagine what a hassle it'd be to have to get that $ back and return it to clients?

Definitely talk to your accountant (I know, I know, you already are ) but in CA you have to pay tax on any work that goes into the production of the final product - translation - you have to charge tax on your whole package because the work (shooting, editing, etc) was in the production of your product (disc, album, print, etc). Also, here in CA you pay your tax to the state when your product is delivered, not when you accept the deposit, so you don't pay the tax to the state until after the wedding (or portrait session, etc) even if you collected it earlier. It's all very complicated (hence the talk to your accountant bit).

I am no expert, but this is what I did. I had the same problem with my quickbooks where I would invoice the customer for the whole package and then receive payment on the retainer and the sales tax liablility would show the whole package tax due. I pay my sales tax quarterly too so this was messing up my books.

I just went in and switched my sales tax and business type to a cash basis instead of accrual and problem was solved, then it only calculates sales tax due when you receive income towards an invoice instead of the whole invoice. So it sounds like your quickbooks might just have you set up on accrual instead of a cash based business.

Hope that helps

I am confussed. I live in CA and my accountant says we don't charge tax on a service, only on the products and only if tax was not paid on them when I purchased them? I have to pay income tax on the rest. We have an LLC, maybe it's different? Is he messing me up?

I would suggest talking with the friendly tax person and not just any accountant. Where I live, if I deliver any kind of tangible product, I need to collect and remit sales taxes on the entire package.

If I show up and shoot, no sales tax. That's just a service.

If I show up, shoot, and give any kind of pictures, files, or anything tangible, then I need to collect and remit sales tax. That includes a product.

I don't know what would happen if I tried to bill separately for my service vs products. I believe I would need to actually bill and collect separately in order to keep the service part free from sales tax. Why would I want to do that, though? I use the public roads and need public services in order to provide my packages. I see no reason why my state shouldn't get its fair share.


Eric

It sounds like you're confusing income tax with sales tax.

Here in Ohio, we never charge sales tax -- we collect it. There's a big difference there. We have to collect sales tax on everything that will result in a product to be delivered. So, that's everything including engagement sessions, retainers, portrait sessions -- everything.

The only way around it is if there is never any intention of delivering any product -- which doesn't make any sense for photography.

Now, you might be able to argue that if the only way your customer is receiving anything is via e-mail or ftp. This may be true (but probably isn't) in your state, but it's changing in all states, anyway, so it's safer to collect the tax.

If you resell something at the exact same price you paid for it (and paid sales tax when you purchased it) you might not have to pay sales tax on it. You'd still need to collect it -- so the sales tax isn't paid twice.

However, if there's any mark-up on what you're reselling, you'd need to collect all sales tax and pay the sales tax on the difference. That's why you should never pay sales tax on something you're planning on reselling. It gets too confusing and if you're audited, you'll most likely have to pay it anyway -- with an additional fee, of course.

Now I really am confussed. He says as long as it is a part of the package and not sold seperately and I have paid tax on it...I have paid the tax and nothing else has to be done. If I itemize it in the package at an increased value is when I would have ot pay tax. As far as the services go, he says there is no sales tax on services rendered. I need to call him and go over this again, and if he is wrong, I NEED A NEW ACCOUNTANT! Recommendations in CA?

Pam-
Your accountant is mistaken. You should read and have your accountant read this document: www.boe.ca.gov/pdf/pub68.pdf It defines sales tax info specific to photographers in California.

Interesting - I could not find anything about retainer fees though. Are you including this as part of the labor?

Am I confused or are there two different questions going on in this discussion? The original question seemed like "Why does Quickbooks make me pay my sales tax on the entire package even though I've only received the retainer?" . The other is a state-by-state question of "Do I OWE sales tax on the entire package or just the tangible products or nothing?"

I like to know the answer to the first question. When I put in a new client that has selected a package of $5000 and then enter their deposit of $1000, my sales tax account shows that I owe sales tax on the ENTIRE package during the quarter that I received only the retainer, not the quarter that they pay the rest of the balance. That seems silly since they are only retaining my services. In the end it's the same, but that's a big chunk out of my retainer that I'd rather hang onto, especially during the slow season.

Quickbooks gurus - help?

Georgia is the same as Florida I believe. I too am setting up Quickbooks and asked "my" accountant the same Question.

1. No sales tax on services
2. No sales tax on product you already paid sales tax on (that you provide to your clients).
3. Sales tax on product where no sales tax was collected by any middle "man".

PS. I say "MY" above because I have been too poor to afford an accountant (still am by the way, but I can't afford not to have someone to consult with) until I started my business.

Greetings everyone.

LoriB, if you want to "collaborate", drop me a PM or email.

kind of another option...

my accountant suggested not using quickbooks. it's not user friendly for our biz.
just the way we are set up.

i don't really have a suggestion for what to use, and i know quickbooks is the industry 'standard', but you could try something else.

I am just starting quickbooks. How did you switch from acrual to cash? I am dying to do that.
Thanks,
Jeff

Previously when I've contracted a wedding and accepted a retainer, I've paid the sales tax on the amount of the retainer received that quarter. Then I've paid the sales tax on the balance when the rest of it is received. QuickBooks seems like it's wanting me to pay sales tax for the entire amount up front.

What do you all do?


I hate to be the bearer of bad news but all photography in Florida is NOT A SERVICE but considered a product and the full amount is taxable and due when you collect your retainer. ( example furniture store has a 90 day no payment EXCEPT for sales taxes because they are due when the product is sold).
So we collect the entire sales tax due on the total when we sign and collect that money as well. This should not come out of your pocket.

PLEASE check with your accountant and also call them for yourself 800-352-3671.


I am not an accountant so this is just hear say from the tax people.

Thanks guys...I know I took the conversation off track, but you have saved me a LOT of headaches! Off to look for a new accountant!

These things really depend on your state (and county, city, areas in the city, etc.). For us, we tax everything. There is no reason anyone would pay us to come and photograph an event without expecting to receive at least one image in some way or another -- whether it's a print or a digital file or DVD show or whatever.

Because the intent is for a product, it must be taxed. BUT -- this is different than in other states. In other states, you can (need to?) itemize your package and only collect tax on the tangible goods.

As far as paying sales tax on something you purchase and then sell at a markup without collecting sales tax -- that just seems wrong. Maybe it's not, but it sure seems like in the end, sales tax was never collected (and paid) on the full sales amount. That's why you should never pay sales tax on something you intend to resell.

When I signed up for my business tax account in CA they gave me a book to read with all of the "rules" for photographers and taxes. One of them was about what if I collect part of the package price up front and the rest on delivery of the services. Their answer was that it was all taxable, but only to be turned in to the state once the WHOLE payment was completed. If you didn't get this booklet from them (I did my application in person so they gave me lots of info) then I'd suggest you get a copy somehow. It's really useful!

Really? Because I was reading something on the BOE website for photogs (can't remember where it was of course) that said you have to pay the tax on the whole thing when you get the deposit.

+1. This was how I was instructed, and at my annual tax appointment yesterday, they verified it again. (Which keeps in line with what I read on my own from the BOE).

Bottom line, you'll get a different answer depending on who you ask on what day, so to be safe, my attorney advised me to write the BOE and ask for an answer in writing. Keep that letter as my basis to go off of, that way, if there ever is an issue, I can rely on the letter from the Board of Equalization to cover my toosh.

From the Tax Tips for Photographers handout:

"Tax is due fo the period in which you make a sale, regardless of when you receive payment. The sale takes place when you transfer ownership or posession of the photograph to your customer. You should not report deposits your receive from customers for future delivery of photographs until the sale is complete.
Example:
As a wedding photographer, you customarily take deposits for your services, requireing 50 percent of your payment in advance and 50 percent when you deliver the photographs to the customer. You may charge $2000 for photographs of a June wedding, taking a deposit of $1000 from a customer in March. The customer pays the balance due when you deliver the photographs in June. You must report the entire $2000 charge on the sales and use tax return you file for the tax reporting period that includes the month of June."

I don't think it gets much clearer than that. Plus I checked it with my accountant at my meeting this week and she agreed with me. I'm sticking to my way of doing it