Collecting sales taxes is one of the most confusing parts of running a business. And you should be collecting sales taxes if you sell a physical product (like . . . oh, I don't know . . . art!).
But your life will be a lot easier if you take a class. Or two. Or three.
First, make sure your business is registered with your state. In Colorado, this is through our Department of State either by registering as an LLC or corporation or reserving a name for a sole proprietorship.
Next, you'll need a sales tax license. In Colorado, we apply for a license through the Department of Revenue.
Colorado is a “point of delivery” state, meaning that we collect taxes based on the locations we have in common with the recipient. So, if I ship something to Durango, I only charge State sales tax. If I ship to my hometown of Golden, I charge State, City, County, and a special Denver-area tax.
It's enough to make a person go mad! Instead of pulling my hair out*, I sought help.
Find a class
Check with your state and municipal departments of revenue for free tax classes. A good tax class will tell you how to 1) collect taxes and 2) submit them to the government entity.
Moreover, you will make contacts in the revenue offices that can help with any future questions.
I can only speak of my experience in Colorado. Your department names and form requirements might be very different.
*I'm still tempted to pull my hair out from time to time, but I know people are there to help if I need it.
5 thoughts on “Take a Sales Tax Class”
Thanks for the reminder. I need to do some brush up on my own state of Illinois along wiht what’s required by other states if I’m in art fairs in those states.
I am always baffled by the number of customers who act surprised (usually in a displeased sort of manner) that I charge sales tax.
Thanks Alyson. This is a good post and very important for artists. There are some cultural art districts in Louisiana where artists and galleries are tax exempt for original works of art. It is defined by geography and you have to fill out paperwork on each sale. Other states may have this as well. If you contact your department of state, they will be able to tell you if it is offered.
I know of a few artists that have a retail art supply store clear the credit card purchase for them so the store performs the sales tax payment. The store then pays the artist when the credit card clears. 10% is all the service runs and it keeps your books legal and easy.
Check out starvinartist.com.
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