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    I have a business questions. As I am just starting out I am trying to accumulate prints for my portfolio. When I purchase prints from my lab ( no tax paid) How do account for that. Because I am not turning around and selling the prints to a customer. Do I pay for the sales tax on the cost of the prints personally.
    I hope this makes sense. Just want to make sure I am doing the right thing.
    Thanks
    Kelly

  • #2
    Lab costs are lab costs. Mine go in a category call outside services.

    They are deducted and I don't pay taxes.

    Check you local laws. A good CPA will help.

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    • #3
      PS Good job for trying to do the right thing and keep up with the very tough tax laws.

      Comment


      • #4
        Originally posted by Kelly Patterson
        I have a business questions. As I am just starting out I am trying to accumulate prints for my portfolio. When I purchase prints from my lab ( no tax paid) How do account for that. Because I am not turning around and selling the prints to a customer. Do I pay for the sales tax on the cost of the prints personally.
        I hope this makes sense. Just want to make sure I am doing the right thing.
        Thanks
        Kelly
        Kelly,

        First of all, you should not PAY taxes on any of the raw materials (prints) that are used in production of a finished product (portrait). You would COLLECT taxes on the retail sale (to your client) of the finished portrait. You go about not paying taxes by having a sales tax certificate on file with your vendors (labs, frame suppliers, etc.)

        Since your portfolio will be used for promotion (and not sold to a client), no taxes would be paid and you would account for the cost as an expense, under the account set up for advertising. All accounting 101.

        Burke

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        • #5
          portfolio prints count as "advertising/marketing"

          for lots more business info contact STUDIO MANAGEMENT SERVICES (sms) through PPA.
          you can do a one-time consultation with them to get your business rolling.

          Comment


          • #6
            Be ever so careful about asking questions like this on the Pro4um.

            What you need to know is how the question would be answered in your state or taxing district.

            If I here in WA had asked that question, the answer from Burke and Lori would have gotten me in trouble and open to fines, as here anything you buy in a non-taxable mode, then turn around and use yourself (such as advertising, your own personal use, whatever), that item is then subject to a "use" tax, which is the same amount that the sales tax is. And the tax folks here keep a pretty good watch on that.

            The correct answer for your question is to check with the local folks where you live and do business, going to be really hard to fall back on another states tax laws while you are disputing with the tax guy from down the street......

            Mike

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            • #7
              thanks everyone for your replies.
              I know tax laws can be tricky. I will check into it. I guess I asked it here because the question just came to me as I was uploading a file to the lab. I thought this may be quicker than sitting on hold waiting for the appropriate person to answer my question.
              I remeber when I filed my business I made sure I filled out the right codes etc etc.
              I then got my licence and it showed that I was a registered as an optomotrist not a photographer. Boy did I call quickly I thought oh boy with the little bit I was making I was sure it would have raised some eyebrows at tax time.
              Thanks again
              Kelly

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              • #8
                My answer would be that even though it may currently be on display in my reception room, it is still for sale to the client... they just haven't got around to picking it up yet. And since it is for re-sale, I wouldn't pay sales tax...

                But, Mike is giving you the correct answer. Always go to your own CPA in your own state for tax questions.
                Last edited by Chet Coonrod; 06-14-2005, 05:03 PM.

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                • #9
                  Kelly,

                  Are you are referring to sales tax? If so. . .

                  If the print is never going to be sold you should pay sales tax on it. On my tax form it's called use tax. Use tax should be remitted to the state on any item you purchase, not for resale, that you haven't already paid tax on. For example, if you order supplies or equipment from out of state mail order or over the internet and the vendor does not charge sales tax, you still need to remit the tax as use tax. The same would apply to prints purchased for display. If you plan to sell them later, you can probably get by without the tax.

                  Check with your accountant or state tax office to be sure but that's the way I read it.

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                  • #10
                    Mike is correct. Before I go any further, check with your CPA....don't take my word for it....

                    I'm in NC. We are to pay sales tax on anything that isn't a component part of the picture we are selling. If you don't sell your displays, then you should pay sales tax on everything associated with it.

                    I also do as Chet does. My studio displays are just portraits that haven't been purchased yet. I would sell one off the wall to the client if they asked. Every display I have is a potential sale, and I did sell one off my wall in the last month or two.

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                    • #11
                      thanks again,
                      Yes I did mean sales tax.
                      Kendra what part of NC are you in.
                      Kelly

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                      • #12
                        Greensboro, what part are you from?

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                        • #13
                          charlotte, not too far away!

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