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FAST CLASS: Legal Survival Guide

Lesson 7 of 17

Sales Tax

 

FAST CLASS: Legal Survival Guide

Lesson 7 of 17

Sales Tax

 

Lesson Info

Sales Tax

we're gonna move on to sales tax. Now again, I don't intend to give much state specific advice on sales tax, but I want to tell you what sales tax is sales tax generally is this creature that that you have to register to collect? All right? Whatever state you're in, every state has a little different procedure on how to register to collect the sales tax. So you'd call your state Department of Revenue or your state division of taxation. And you tell them I am blue steel, photography, my employer I. D. Number is such and such. I want to register to pay sales tax and they will tell you what forms to fill out and they'll give you a state tax I. D. Number. Now what that means is as we use our Quickbooks program and we collect sales tax on our sales. It's going to go into a little account in every quarter will remit that sales tax to the state of Washington or California and Missouri. And we'll do that on time. They'll give us a sales tax number in some states, require us to post a bond uh t...

o get that in case I don't pay it or leave the state. Um Then they'd go after my bonding company and then my bonding company and come after me. Um So it allows you also to purchase your supplies tax free if they go into the finished product, Okay? So if you're a photographer and you're running a fancy Canon printer, a picks MMA pro or whatever, the new one that I want to get is that new, fancy one with the big ink tanks. Um You don't have to pay sales tax on your ink. You don't have to pay sales tax on your paper because your camera is the machinery that generates the products that you're collecting sales tax on. You don't have to pay sales tax on your camera. It's tax exempt. Um those things that go into the finished product, we get to purchase tax free. So that's one of the benefits of registering to pay sales tax, the joy of sales tax. It really is kind of annoying. Um sales that you might have to collect sales tax on include the sales of your photographs, your portraits, your prints, your Cds, um negatives, any kind of tangible tangible personal property equipment, recording, wedding sitting fees. It varies by state. School pictures may be tax exempt and of course, out of state sales unless your amazon dot com are generally out of state if you're selling them to a state where you don't have a brick or mortar location. So any of the internet sales generally your tax free, There are some crazy sales tax locations for my friends in California. If you wanted to know What the rules were regarding sales tax in California, you could try to read this 51 page California state publication that would tell you as a photographer how to do it. But suffice it to say in California, they've got these concepts of technology transfer agreements where if you are transferring the rights um to your client, Their taxable at up to 200% of the combined cost of materials and labor. This is what that means. In California, let's say I charge 10 grand to produce a shoot and the expenses for the shoot were $70,000. So I spent 70 to do five day production. I get paid 10, I got 80 grand in the shoot. The state can tax that up to 200% of that. That's 100 and $60,000. How much did I get off the gig? 10 grand. What are they gonna want me to remit sales tax on? 160 those. That includes the expenses that were reimbursed by the client. So if you're in California, I don't presume to tell you what the California sales tax law is. Um but you need to know it and I point that out, California has a five page flow chart flow chart on how to figure out if you owe sales tax. Um It's insane. Uh There's the pdf location, uh it's a p a national dot com forward slash files etcetera. Uh If you buy it, you'll be able to go back and pull that that web link off of there. Or just search California sales tax flow chart and probably you'll find it. There's this also this concept called use tax. If you're not familiar with use tax, it's kind of like sales tax, but it applies in your state. So let's say that I'm just an individual consumer. I am Craig Heidemann non photographer, not working. Uh, my blue steel gig and um I go buy a Canon five D. Mark three from being h everybody has probably done that at some point in time or if they haven't, they should do it because it's so satisfying. Um and uh it will arrive at your house and you'll be taking these marvelous pictures and you won't have paid a penny of sales tax on it. But if you would have gone down your local camera shop, he would have charged you your local sales tax rate. Well, your state chances are has a consumers use tax and you're required that year to submit a use tax return that is a little bit less than but about the same as the sales tax and they require you to pay it. How many of you all have paid your state use tax returns on your out of state purchases that you bought for your personal things. Crickets, crickets, I hear the online crickets to no one does. They're usually, each state has an exemption amount of 1000 or 2000 bucks that you can buy out of state that you don't have to pay on. Um But once you exceed that limit you owe it. So there's a lot of tax returns out there that aren't being filed that are owed and in these challenging economic times since we're in the Depression or I guess we're coming out of the depression. Now A lot of states are really going after these use tax dollars to try and fill up the coffers in 2009 Florida sent out a letter and I went over this in my other tax presentation but I'll talk about it a little bit more, I've expanded on it. Um Moving on. The other type of tax. So we've given birth to our business were registered for our our state tax. We have to think about unemployment tax, it's cheap. No worries. In Missouri we would file an application to determine our liability with the Missouri division of employment security. You need to write down register for unemployment tax. That's gonna vary from state to state on how they do it. It's a very low payment. It's usually paid quarterly. That's only if you have employees. I recommend if you have no employees that you still register and tell them you have zero employees. I recommend that you register for unemployment tax and tell them that you have zero employees. Again it's paid quarterly. The rates vary, they are usually very low. Um Next slide or come in Missouri for instance, you don't have to have work comp insurance unless you have five employees including yourself. So that vary. State to state. You can usually do a fairly accurate google search for your state to determine your states um work comp requirements, make sure that you're getting your information from a dot gov website, not a Russian bride troll reconnect website but generally there's a limitation. Sometimes it's five, sometimes it's four, sometimes it's 10 but getting work comp insurance is relatively easy. You have to apply, go through underwriting. The rates vary based on your occupational classification. So somebody working high steel is going to pay higher premiums than somebody that's working in an office. And then once your rates are set, the premiums vary by payroll. So again that's where calm. There are certain local licenses and permits. These are the fine points. We're in the homestretch guys. Now we've got our work copy issue dealt with. We have to figure out whether a local business license is required and in most places it is if you don't have a local business license either at your county level or your city level, you're missing out on that one last thing to make you legal. Um, my, my goal for you guys was to get you a legal and to help you stay there. Right? So having that um, local business license is super important. Um, sometimes for instance, in my jurisdiction, there's a county business license, King County for instance, and then a Seattle business license for doing business in the city. So when I go to do, I live in the county. My shot my studios in the county, My studios in the county. When I come to do a wedding show in the city, I have to register that year for a city business license just to do a bridal show. So make sure that your legal, your competitors will use it to embarrass you if you're not. Um, in addition, sometimes there are park permits in our park system has come up with a new photographers need to pay $150 a year to use the parks. So, um, we've met with the city and talked with him about it, etcetera, etcetera. But this, this is, uh, something that you need to think about because nothing is more embarrassing when you've set up your business, you're making some money, you're out with your clients. And the park ranger comes up and says, have you paid? Uh, no, okay, well you have to leave. And so you take Mama and daddy and there are 18 little kids and their little white matching shirts and jeans and barefoot. Take them out of the park because you didn't pay your park permit.

Class Description

Ready to turn your creative side project into a thriving business? Join Craig Heidemann for an introduction to the business and accounting principles every creative professional needs to know. 

In this class, Craig will take you step-by-step through the process of setting up, running, and growing a small business. You’ll learn how to use QuickBooks to manage your finances, including managing client contracts and invoices. Craig will also help you navigate the potentially confusing tax, legal, and copyright issues surrounding small businesses. You’ll also learn how to contract and/or hire people to do the tasks you can’t do yourself. 

Whether you’re just starting out as a business owner or you’re a longtime entrepreneur ready for a refresher course, this course will give you a roadmap to business success.

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