Should I charge taxes?

Nico-Mendez · ‎June 25, 2018

Hello, I´m starting my busines in California and I have a doubt about the invoices I issue.

I haven´t started yet so I think is a good time to ask this:

My company has a service agreement with another California company. This mean I get paid every month the same amount as a company.

Because of that every month I issue them an invoice. Should taht invoice contain taxes? is the rate 9,5% correct?

EmilyCowan · ‎June 26, 2018

Hey @Nico-Mendez - welcome to QB Community, and congrats on your new venture! What type of service does your business offer?

Anonymous · ‎June 26, 2018

Hey @Nico-Mendez,

Indeed, you picked the perfect time to ask. It really depends on what you're selling. If you are selling goods, yes you must collect sales tax. If you are selling services, it depends. Some states and industries do charge taxes on services, but some do not.

It's a complicated question without a single answer because it depends on what you're selling.

Any time you have a tax question, we recommend consulting the authority on the matter, your state Tax Board/Tax Center. California provides some nice documentation on "what is taxable" in our Golden State. I'd recommend giving them a call and discussing your specific situation with their specialists since they know the laws.

Nico-Mendez · ‎June 26, 2018

Thanks JamesOng,

In this case my company is based in California and I´m selling services to another company in California.

My company is a graphic design and consultan company. In this case the services I´m providing are to lead the whole design operetion withing that company. I do everything related to designs for them.

Let me know what you think.

Thanks again!

Nico.

Nico-Mendez · ‎June 26, 2018

Hi thanks Emily Cowan,

My company is a graphic design and consultan company. In this case the services I´m providing are to lead the whole design operetion withing that company. I do everything related to designs for them.

Thank you!

Nico.

EmilyCowan · ‎June 26, 2018

Hey, @Nico-Mendez - that's awesome :smileyhappy:

Definitely follow up on @Anonymous's recommendation to check in with a tax professional (LOL, better safe than sorry).

Would love to hear more about your work when you get a chance!

RebeccaQuinn · ‎June 27, 2018

Hi @Nico-Mendez,

I'm also in California. Start with this state website: https://www.cdtfa.ca.gov/. There is a lot of info there plus you can contact them or go in person to get help. Each business is different and there is a fine line between products/services that are taxable or not in this new digital world. Sometimes the same exact thing can be taxable or not depending on how it is delivered. Please research and/or contact them personally!

I didn't need to charge sales tax on my services but I did get a seller's permit so I could sell taxable products. The permit was easy to get and, while there, I was given info about an upcoming free seminar taught by them. I attended the seminar and learned so much about sales tax, what was taxable or not, how the rates vary between all the CA cities and counties, and how to do the sales tax forms myself. I found them to be very helpful.

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Should I charge taxes?