Guide to Photography Seller’s Permits & Sales Taxes
As professional photographer, or amateur turning pro, one of the first questions that may come to your mind is probably: do I need a sellers permit? If you’re a photographer in most US states, the unfortunate answer is … yes.
As a photographer, it is important to understand the legal requirements of operating a business, including obtaining a seller’s permit and collecting and reporting sales taxes. Failure to comply with these regulations can result in penalties and legal consequences. This guide will provide an overview of seller’s permits and sales taxes, as well as instructions on how to obtain a seller’s permit and comply with sales tax laws.
What is a Seller’s Permit?
A seller’s permit is a document that allows a business to sell products or services and collect sales tax from customers. In the case of photographers, a seller’s permit is necessary if they are offering photography services for a fee. Without a seller’s permit, a photographer may be subject to fines or legal action.
Sales tax is a tax imposed by state and local governments on the sale of goods and services. In the case of photographers, this tax applies to the fees charged for photography services. The amount of sales tax varies by state and locality, and failure to collect and report sales tax can result in penalties and legal consequences.
How to Obtain a Seller’s Permit
The process of obtaining a seller’s permit varies by state, but generally involves filling out an application and providing information about the business, such as the name and address of the business, the types of products or services offered, and the expected sales volume. Some states also require a fee to be paid when applying for a seller’s permit. Information on how to obtain a seller’s permit can be found on the website of the state’s tax agency.
Collecting and Reporting Sales Tax
Once a seller’s permit has been obtained, photographers must collect sales tax from clients and report and remit the tax to the state. The amount of sales tax to be collected depends on the state and locality in which the photographer operates. The tax must be reported and remitted to the state on a regular basis, typically monthly or quarterly.
Exemptions and Exceptions
There are some exemptions and exceptions to sales tax laws that photographers should be aware of. For example, some states do not require sales tax to be collected on photography services provided to non-profit organizations or government agencies. Additionally, some states offer exemptions for certain types of photography services, such as school portraits or medical photography. Photographers should check with their state’s tax agency to determine if they qualify for any exemptions or exceptions.
Business License FAQs
Do photographers need a business license?
In most cases, photographers who operate as a business are required to obtain a business license. This is because they are offering a service for payment and are considered to be self-employed. The specific requirements for obtaining a business license may vary depending on the location and the type of photography services being offered. Some areas may require photographers to have a separate license for specific types of photography, such as wedding or commercial photography. It is important for photographers to research the requirements in their area and comply with any applicable regulations in order to operate their business legally.
According to the California State Board of Equalization, the government entity that collects California state sales and use tax, you must obtain an seller’spermit if you sell or lease merchandise, vehicles, or other tangible personal property in California. The best resource we found for California Photographers is the “Tax Tips For Photographers, Photo, Finishers, and Film Processing Labratories. According to this document, as well as the application for the permit (BOE-400-SPA) found on https://www.boe.ca.gov/, photographs are unfortunately considered a tangible item, with the few exceptions listed below.
So how much tax do we need to pay?
As photographers, since part of our product is services, and services are generally not taxed, we originally thought that we wouldn’t have to pay taxes on the entire package prices. However, upon further research, we learned that when you sell art prints or shoot photographs for noncommercial use, i.e. wedding photography, the taxable amount of your charge will generally include all of the following: 1)Your charges for the physical product you transfer to your customer, 2) Any labor and services involved in producing or fabricating the photograph, and 3) Any reproduction rights associated with the photograph.
What are the exceptions?
According to the aforementioned Tax Tips document, “common nontaxable sales include sales of photographs transferred electronically, sales for resale, sales to the U.S. government, and sales in interstate and foreign commerce. Tax applies to your sale of tangible, physical products, including photographs. However, if you transfer a photograph electronically and do not include any physical product in your sale, tax does not apply. You should document any electronic transfer of a photograph so that you can show why tax does not apply to that transaction. For instance, if you electronically transmit a photograph to a customer by e-mail, you should print out a copy of the transmittal e-mail and retain that copy in your records”
When and how do we pay?
Returns are filed quarterly through the BOE website. E-filing is free and fast.
Who to ask for any questions?
Unlike most government agencies, the field offices have very few prompts; and it’s pretty quick to talk to a represenative. My questions were answered the quickest and best by the offices in small, wealthy towns. You can find your local California State Board of Equalization office phone number from https://www.boe.ca.gov/.
What form do I need and where can I get the form?
BOE-400-SPACalifornia Seller’s Permit Application for Individuals/ Partnerships/ Corporations/ Organizations (Regular or Temporary)
How to apply: Download form from the website mentioned above and send or take your application to the district office nearest your place of business.
How long does it take to get my permit?
Approximately two weeks from the time of receipt.
Do I need to charge my clients sales tax?
YES! That is, unless you want to pay the sales tax out of your own pocket. Either way, the state will get their sales tax one way or another.
Do freelance photographers need a business license?
In most jurisdictions, freelance photographers are required to obtain a business license in order to legally operate their business. This is because they are providing a service in exchange for payment and are considered self-employed. The requirements for obtaining a business license may vary depending on the location and the type of photography services being offered. Freelance photographers should check with their local government to determine the specific licensing requirements for their area. Additionally, it is important for freelance photographers to comply with any applicable tax laws and regulations in order to avoid potential legal and financial issues.
Obtaining a seller’s permit and complying with sales tax laws may seem like a daunting task, but it is essential for photographers who wish to operate their business legally. By following the guidelines outlined in this guide, photographers can ensure that they are in compliance with state and local regulations and avoid potential penalties and legal consequences. Additional resources on seller’s permits and sales tax laws can be found on the website of the state’s tax agency.