Sales tax for photographers
“Sales tax for photographers.” Your first instinct might be to run for the hills, but sales tax is definitely something you need to understand as a business owner. During the past few years I have seen countless photographers ask about sales tax in online forums and groups. All too often the conversation includes at least one photographer having what I call an “oh crap” moment in which they say, “Huh, I had absolutely no idea I was supposed to collect sales tax!” Here is an example:
Amy spent four years building her wedding photography business and things were going great. Her booking percentage was high and she had worked hard to improve her album sales process, which helped to significantly increase her annual gross revenue to $150,000 in 2011. Then one day she received a letter from her state tax office informing her that her business was selected for a sales tax audit. During this audit, she discovered she should have collected sales tax from her clients on not only her album sales, but also on the photography services she provided. She had erroneously believed that her photography services were not subject to sales tax and now she owed the state over $25,000 in unpaid sales tax, plus fines and interest!
I don’t want you to be in Amy’s shoes. I don’t want you to be the photographer who fails to collect sales tax from your clients and finds out too many years down the road that the state is coming to audit you and wants its money. The tax money that you fail to collect comes straight out of your pocket. Sure, you can try and find your clients and ask them if they will pay the sales tax you mistakenly didn’t collect from them two years ago…good luck with that! They are under no obligation to pay it.