[grooverider]

Am I supposed to charge taxes on the work that I do? I heard that you only add tax if an actual CD or printed piece is physically given to the client. I have a client (lets call them the XYZ Network) who was looking for a corporate branding template for their DVD packaging. I did the work on spec and they agreed on a price, am I supposed to just charge them the price I quoted or can I add sales tax to that? What is the industry standards. Help please.

Only asking cause I owe 8,000 in taxes this year. Yuck!

Oh and I am and my client is American based so Im looking for information from US designers, since this is regarding US tax laws (sorry all you international designers but thanks for reading anyways)

[Clever Mind]

Normally the U.S. does not allow for taxable services. Thats what i got hit with this year as well. But if you give the artwork on a cd or dvd then yes you should be able to tax part of the total. Exactly how much? im not sure i would ask an accountant. but 8 grand thats a biggie sorry to hear that. you should be able to write off a lot of expenses if your doing freelance work as well, from the car you drive to the clothes you wear and the hair cut you got.

[cjgraphix]

You can really only charge tax on those items (DVD, CD, ETC) if it is an actual product, and was purchased wholesale (without tax). Giving a client a CD with there information on it is not taxable. You can however write off the cost of the CD from your gross annual income.

Write offs are the key to getting that total you owe down... each year our accountant gives us a number like that after looking at our gross income, but after we get all the write offs for things that number usually drops to 3-5k.

Either way... taxes SUCK, and are due in about 2-3 weeks. SUCK! SUCK SUCK!

[pgo]

I'm getting money back from the government this year. Ah, the joys of being employed.

Anyway, you should be budgeting taxes into your quotes. If you're freelancing significantly (and it appears you are) you should be saving at least 40% of your income for taxes.

So, if you were going to charge $1000 for something, expect $400 (at least) to go toward your tax fund.

Also, sales tax is only valid for state taxes, of course, and will have no effect on your federal income tax. I believe it is only charged on certain goods, but you'll have to ask an accountant about that.

[elementdesign]

Sales tax varies by state but I know that here (WI) we must charge sales tax on anything we physically sell to a client. However, we never "sell" a disk to a client containing their files. The files are always available on our server or the clients'. We do sometimes give a gift of a disk containing backups of their files though.

When I first registered the business, I signed up for a seller's permit because I thought I had to charge sales tax. After talking to an accountant and finding ways around it, I was able have the seller's permit removed (and the quarterly estimated sales tax payments ).

The best money spent is on your accountant.