Photography Business – Washington Taxes Part 3

State Taxes 

The State of Washington does not impose a corporate, unitary, or personal income tax. As a photographer you are subject to business and occupations (B&O) tax, a retail sales/use tax, and state property taxes. To pay taxes to the state, you need to register through the State of Washington Department of Revenue – as I have mentioned in previous posts, when applying for a state business license, registration to pay tax is included on the same form. This costs no additional fee. As I have outlined before, you must obtain a tax registration if you answer “yes” to any of the questions listed below:

  • Do you plan to gross over $12,000 per year?
  • Will you be selling at retail any item or product to another person?
  • Will you be repairing, installing, altering, decorating, or improving any item or product for another person?
  • Will you engage in a business that is responsible for any other state taxes?
  • Will you engage in a business that is responsible for any other state taxes?

Below is an overview of what you may encounter relating to taxes and the state of Washington.

kT8zoAGTrBusiness and Occupation Tax is levied the gross receipts or gross income, without any deduction for costs of labor, materials, business taxes, or other costs of doing business, unless a valid exemption or deduction applies. The nature of the business activity determines the appropriate B&O tax classifications. B&O tax classifications commonly found in the photography industry include retail, service, and other activities, wholesaling, and royalties. Each B&O classification has its own tax rate.

Retail Sales Tax must be collected and remitted by businesses engaged in retail activities. Retail sales tax is paid on total charges unless a specific exemption applies. The sales tax rate is generally determined by the location where the photos are delivered to – sales tax rates vary around the state.

Use Tax, or deferred sales tax, is owed on items used as a consumer if Washington sales tax has not been collected by the seller, unless an exemption applies. Deferred sales tax or use tax also applies to retail services if sales tax was not paid a the time of purchase.

Wholesale Sales are those made to businesses buying a product or service for resale without any intervening use. The sellers wholesale income is subject to Wholesaling B&O tax. Businesses making wholesale sales do not collect retail sales tax on their charges when they receive a valid reseller permit.

Reseller Permit is used to purchase goods that will be resold to your customer int eh normal course of business. Typical items purchased fro resale include photography quality paper and picture frames.

Royalties – your gross income from licensing the right to use your intangible property to others is subject to B&O tax under the Royalties classification. You do not need to collect sales tax from your customer on royalties transactions.

Sales of Photos to Out of State Customers – you are not required to collect Washington sales tax when the photos are received by the customer at a location outside of Washington. The Interstate and Foreign Sales deduction is used when filing your excise tax return to account for these sales.

Digital Digital Photographs – Washington State law generally treats digital photographs and tangible photographs in the same manner for tax purposes.

Sitting Fees – when selling photographs to customers, you must collect and remit sales tax on all sitting fees. In each case the charges are subject to the Retailing B&O tax, and the seller must collect and remit sales tax.

 

It’s always important to understand the laws that allow you to operate in your state. As a business owner, it is your responsibility to understand the laws and be knowledgeable and up to date on any changes.

Seattle presents great opportunities for photographers, what government or local resources have helped you with your business?

Related Posts:

Photography Business – Washington Taxes Part 1

Photography Business – Washington Taxes Part 2

Resources:

Washington State Department of Revenue

Clip Art Contribution

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