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Thread: Help please. Invoicing quesiton.

  1. #1
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    Help please. Invoicing quesiton.

    I'm new to the free lancing business and needed some help writing out an invoice. I've done a couple of jobs already and a friend pointed out to me that I forgot to charge tax. So that's one thing I'm already missing. Is there anything else?

    Also, for this invoice I was planning to include a letter explaining to the client (whom I've done work for recently) about my mistake of not including tax. Is this something the client will understand? Or am I going about this the wrong way?

    Any tips would be appreciated. Thanks.

  2. #2
    Senior Member MG315's Avatar
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    assuming you did web design and are in the US, web design is a service, not a product, therefore you dont need to charge sales tax. you will need to file income tax each year, but that doesnt involve the client .
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  3. #3
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    Thanks mg315,
    Yes it is web design. What if i'm handing them the actual source files? Is that considered a product? Or anything of similar nature for that matter. Thanks again.

  4. #4
    Senior Member MG315's Avatar
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    a few months ago i started to wonder if i needed to charge sales tax for design work, because i was working at a print shop and we added sales tax to all of the print work we sold. i talked to my dad who is a tax attorney and he told me design and other related intellectual property doesnt require sales tax, but an actual product such as 1000 business cards do. If you design something you dont charge sales tax for it, but if you print it on paper and sell them a set amount of paper containing it, you add sales tax to it. as source files are not really a product, more of a collection of intellectual property, i dont believe you would need to charge sales tax - but i will talk to my dad again when i have the chance. he's in london right now so i won't be able to talk with him for a few days.

    (From my understanding, correct me if i'm wrong) you develop a flash presentation, no sales tax. you provide source file, no sales tax. you burn it to 500 of those business card cd's to be distributed, sales tax.
    Bill Erickson: resume | portfolio
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    Great Designs for $100

  5. #5
    Senior Member dlowe93's Avatar
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    Originally posted by MG315
    (From my understanding, correct me if i'm wrong) you develop a flash presentation, no sales tax. you provide source file, no sales tax. you burn it to 500 of those business card cd's to be distributed, sales tax.
    That's my understanding as well. As i remember it, the way it works in California; anytime you charged for something that physically transferred hands, you were required to charge sales tax on the entire invoice. Thus, if you burn source files to a CD, and charge $15 for that CD, you need to charge tax on every line item on that invoice.

    However, if you bill a separate invoice that is just that CD, then you only need to charge tax on that invoice alone. Personally, i just throw the CD in free of charge as part of the job. I figure 10 minutes of my time and the cost of a CD is worth the price of not having to do the extra paperwork.

    Keep in mind though, sales tax is not free money. What you collect in tax needs to be documented and then passed along to the state. Can you say tax ID number? Plus, each state has their own tax laws and rates, and many counties and cities have an extra 1/4 or half percent tacked on to that. Some other states have no sales tax at all (for example, Oregon).

    If you are really concerned, i'd contact an accountant who is familiar with your local tax laws and find out what it will cost to give you an overview of your responsiblities. Either that, or talk MG into giving you his dad's email address and then pump him for all he's worth.



    d.
    dlowe93

  6. #6
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    hey guys,
    thanks for the help on this matter. looks like i'm going to be sending out that invoice minus the taxes. my aunt has an accountant friend who i can also ask for some more detailed information. i needed to talk to him anyways about what i can use as a tax write-off anyways. thanks again for the help.

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