Should You Charge Sales Taxes as a Photographer?

This post is going to be all about sales tax for photographers. If you're a photographer, make sure you read and share with your photographer friends, because I see this issue coming up a lot. The majority of our clients are photographers. Often they will come to me, and some of them know if they're supposed to be charging sales tax, some don’t. Some of them are doing it properly, some of them are not. To put it simply, it’s a complicated topic. It’s not the easiest situation. 

Now the tricky part is that every single state is different. And so whenever we talk about sales tax for photographers, we have to really look into each and every state. And obviously I'm not gonna go through all 50 states because that would take a long time. I will, however, give you some general info and resources to help. But we definitely look into this whenever we bring on a new photography client, because it is something that they need to know of. Our team is aware of this as well, so we can make sure everything runs smoothly. 

So what is sales tax?

Sales tax is something that you may or may not have to charge your client. It is completely different from federal tax and state tax. It does vary by state, but it is separate from your typical income tax. It is based on your sales, and you are not actually the one that pays the sales tax. Your client is the one who pays it. As an example, whenever you go to order something online, you go to the checkout page and it says something like “sales tax” or “tax included” at the bottom. You, as the customer, have to pay sales tax.

What happens on the business owner's side of things? As a business owner, after you've received payment, you've collected the sales tax, you have a liability that you have to pay into your state and your county if you have county tax as well. You're kind of the middle-man between the client or customer and the state. And if you are holding on to money that you're supposed to be remitting and paying into the state, then you're kiiiiiiind of doing something that's not supposed to be done. 

If you're not charging your clients sales tax, then because you’re that middle man, it comes back and hits you. I have had clients come to me where they have not been charging sales tax or not doing sales tax properly, and they've had to pay years, like I'm serious years, of sales tax on behalf of their clients. You obviously can't go back and change past invoices, so those clients have to pay that sales tax out of pocket. Let me tell you, that is NOT something that you wanna have to do. You could be losing a lot of money that way because you're technically not supposed to be the one that's paying it.

Where can I find information about it?

Now what and where can we find this information and should you be charging sales tax? When in doubt, look at your state's website. That's where the best information will come from. I will list a few resources, but I would be very careful on where you find your information for sales tax for photographers. I had a client come from having an accountant (that didn’t know anything about photography services) that didn’t have her charge sales tax and it was not being done correctly. She ended up losing money and paying that sales tax out of pocket, because her accountant didn't know anything about photography services. This is why it's very important that if you're in this creative space, you find a bookkeeper, an accountant, anyone you work with that understands your business and knows what you need to be doing.

So there are two different ways to look at photography: Photography as a service, and photography as products. So for example, you’re a photographer and a client books a wedding. You go to shoot the wedding, that is a service. After the wedding you deliver the photos, that is a product (whether it's a digital product or a physical product, they will sometimes claim that is a product).

Now, here's where it gets tricky. Some states will want you to charge sales tax for the service, for the products and basically everything that you do (so there is sales tax for everything). Other states just want you to charge sales tax on the actual physical product, and that's gonna be pretty much every state. Back to our example, you did the wedding and you have an album as part of the package. Great. You have to charge sales tax for the album because you're physically delivering a physical product. Some states will have you charge sales tax on digital downloadable pictures. That’s difficult because what is considered a digital product and what’s not? Like I said, I can't go into every single state. My point in sharing this post is telling you that it is a serious issue and something that you need to look into. You want to make sure that you are doing the correct thing for your state and staying up to date with the changing laws and things.

Economic Nexus 

Another thing that I want you to be aware of, if you are a wedding photographer or any type of photographer that travels a lot, you need to keep track of your economic nexus. I don't think this applies for a lot of people, but if you are a very, very well known photographer traveling to a lot of different states, this may apply to you.

Nexus is basically when you have done enough work and sales inside of a state to trigger their threshold in their nexus. And every single state is different, but here's some examples. Kansas is $100,000, Louisiana's is $100,000 or 200 or more transactions. So you would have to be doing a lot of sales in one state to be triggering that nexus. But I do want to make sure that you are aware of that. Ideally you really would just want to focus on your state, because that’s where you primarily work or have photoshoots. But maybe you live on the border and do shoots in the neighboring state, or you travel often to a specific state you want to be aware of that economic nexus. Just be sure to keep track of those things.

Check your Invoicing

The other thing that I want you to pay attention to is when you are invoicing. You may have to be very detailed on your breakdown, which I think you should be anyways, because you wanna pay attention to what you're selling and what you're not selling. That’s important from a bookkeeping, analytics standpoint. But you might have to go into your Dubsado or HoneyBook and make sure things are set up properly. Because if the state wants you to invoice solely on digital products or solely on physical products, you need to make that as taxable, but not necessarily your service. You can go in and include sales tax on everything and it would include your services but in some states you don't have to do that. So make sure that your settings and the way you’re invoicing is correct, because you might be charging your customers more sales tax than what they have to pay.

Another thing I want you to pay attention to is local rates. The last time I looked in Colorado, and I noticed there's some other states too, they have state AND local sales tax.  So if you are in Colorado (again, check on the rules in your state), you have to pay attention to the local tax. If you're traveling to different counties, that plays in effect as well.  

Resources for More Information

So again, the point in all of this is not to overwhelm or scare you. I'm gonna give you a few resources, obviously, your state's website. So for us, we look at the Ohio Secretary of State's website, that's where a lot of our information comes from. We don't have tax on digital products. We don't have tax on professional services, so I know I'm in the clear. But that could always change, and I would find that information from our state's website. So if you're not sure, go to your state's website and look that up.

Another good resource is Avalara. As a bigger company, they work for a lot of products and e-commerce businesses. They're solely a sales tax company, so they focus on helping people and their companies with sales tax. So they will have a lot of resources. There's a ton of information on their blogs. TaxJar is another one. 

There's definitely resources out there, but I would be very careful when reading other people's blogs that are not accountants or bookkeepers. I've seen some very well known photographers make blogs on sales tax, and they're only talking about their specific location. So they're actually putting out false information because they're not taking into account that every single state is a little bit different. When in doubt, look into your state, ask your accountant, ask a bookkeeper, figure it out for your state. You don't ever wanna just guess on this type of stuff. I definitely encourage you to dive into it a little bit more because you don't wanna be like my client who ended up having to pay a year's worth of sales tax. Or my client who had to pay three year’s worth of sales tax on behalf of their clients. Interestingly enough, I’ve also had another photographer that came in and onboarded with us, and she was actually charging too much sales tax and paying in too much.

Again, this is not to overwhelm you. However there is a lot that goes into sales tax. Make sure that you are working with a professional that knows the space, that understands the types of services that you are doing, and I'm sure you'll be in good hands. Obviously we would love to work with you. We understand the photography space. We have a lot of photography clients and can help you with sales taxes if you are pulling your hair out, unsure of what to do, but wanting to make sure you’re doing it right. We are here for you. Reach out if you have any questions!