Topic: When billing a client, do you tax as well?

When your billing a client, do you tax them as well? I was wondering, because I didn't know if I am supposed to or not?

Re: When billing a client, do you tax as well?

no - at the end of the year I work it out when doing my taxes. My employer takes out enough that I get money back from the gov, so whatever I would owe from freelancing gets deducted from my refund. I don't remember what tax form it is, but if you having them prepared by a professional or your using an online service (TaxAct, TurboTax, etc...) they'll pretty much walks you through step by step

Daniel Marino | www.iamdanielmarino.com

Re: When billing a client, do you tax as well?

Adrian wrote:

When your billing a client, do you tax them as well? I was wondering, because I didn't know if I am supposed to or not?

When you say "tax them" I'm thinking you mean a form of Sales Tax.  Sales tax is not required on services.  Thus the reason you're not charged sales tax for doc visits, etc.  If you're referring to the tax you pay on small business, as a rule I'd hold out 12% and drop it into a high interest account.  That way when "the tax man comes" if you have to pay anything you'll have the money there, if you don't then you've got a nice little refund waiting for you in that account.

FYI, I have to work a 40hr job still so my freelance work is secondary income; because I have a child the tax credit I get typically well outweighs any tax I would be charged.  Sure the refund is smaller, but I'm ok with that as I'd rather have my money being used by me or earning interest as opposed to it sitting in the governments hands doing nothing.

And in case anyone is reading this that knows of a full time, telecommute web dev position, hey let me know!  smile

Live with the wonder of a child, pray with your arms thrown open wide, love with a love that has no end; until I see you again ~ Mark Schultz

Re: When billing a client, do you tax as well?

Thanks for the info guys.

Re: When billing a client, do you tax as well?

Whether or not you need to charge your customers sales tax depends on your particular locality or county. Where I live in Texas, sales tax is not withheld for services. It might be different for you. You should call your state comptroller and your county and city tax assessors to find out if you should be collecting sales tax from your customers.

For example, here is a list of services that are taxable in Texas:
http://www.window.state.tx.us/taxinfo/t … 6_259.html

Ryan Heneise  |  Art of Mission  |  Now with extra-strong Donor Tools mojo

Re: When billing a client, do you tax as well?

Looking at that page again, notice this paragraph:

Data processing
Using a computer for word processing, data entry, data production, or compilation, storage, and manipulation of information. Examples of data processing include check preparation, accounts payable or receivable preparation, and web site creation, storage and maintenance. Merely using a computer as a tool to help perform a professional service is not a data processing service.

What's your take on that last paragraph?

Ryan Heneise  |  Art of Mission  |  Now with extra-strong Donor Tools mojo

Re: When billing a client, do you tax as well?

ryenski wrote:

Whether or not you need to charge your customers sales tax depends on your particular locality or county. Where I live in Texas, sales tax is not withheld for services. It might be different for you. You should call your state comptroller and your county and city tax assessors to find out if you should be collecting sales tax from your customers.

For example, here is a list of services that are taxable in Texas:
http://www.window.state.tx.us/taxinfo/t … 6_259.html

exactly. Being based out of Texas we had to charge sales tax as well. And there is some very gray area in doing business with out of state companies. It's been a while since we looked at it, but for a while we had in our contract that the client had to pay any applicable state taxes but after a visit with our accountant he suggested that we charge the 8.25% (for Texas). Basically he said "If there is a gray area, always error on the side that costs you less. Because if you are audited and you are required to pay that tax... going back to all these companies and getting money will be very difficult." So we moved to having a line item in out proposal that stated local sales tax due with final payment (or you could add it in to each payment).

Look at your local laws and ask an accountant. I know in Texas we have numbers to the state government where you get direction, which we used as well.

I will though, however, say that we did not charge sales tax on hosting. We just ate the 8% of taxes to not have to muddy up the water when someone is trying to compare our hosting prices to the 10000's of online hosting sites. Even though that was also a little illegal as our state law says that you have to explicitly show tax.. as tax.

I dream with an XML intereface

Re: When billing a client, do you tax as well?

See, the line that confuses me is where it says "Merely using a computer as a tool to help perform a professional service is not a data processing service." I take that to mean that if you're acting as a consultant on behalf of someone for their project, then it's not a taxable service. But if you're delivering finished websites to them, then it is taxable. What do you think tank?

Ryan Heneise  |  Art of Mission  |  Now with extra-strong Donor Tools mojo

Re: When billing a client, do you tax as well?

ryenski wrote:

What do you think tank?

Ok Tank, you had to know that line, "Think Tank" would come up sooner or later . . . that's clever!  :lol :lol :lol :lol

Live with the wonder of a child, pray with your arms thrown open wide, love with a love that has no end; until I see you again ~ Mark Schultz

Re: When billing a client, do you tax as well?

ryenski wrote:

See, the line that confuses me is where it says "Merely using a computer as a tool to help perform a professional service is not a data processing service." I take that to mean that if you're acting as a consultant on behalf of someone for their project, then it's not a taxable service. But if you're delivering finished websites to them, then it is taxable. What do you think tank?

I think you hit the nail on the head. I always asked the question, "Did we provide them something or manipulate anything they sent us?". I think if you use the computer as a tool for email to consult them or propose work for them, then it's non-taxable.


think tank... LOL

I dream with an XML intereface