Collecting Sales Tax for Artists

Since it is the beginning of the new year, we thought we would include some tips on things you should know about selling online and offline. More artists are selling online these days, and there is some confusion on how to charge sales taxes.

If you have a storefront, collecting sales tax is required. You charge your customers the sales tax required by the state, city or county you work in. So if you live in Los Angeles, CA, you need to charge sales tax for both the state of California and the City of Los Angeles.

Selling online can be different, and the products you sell might have different requirements.

If you have a presence in a state, like above, an office, warehouse or store, you must collect sales tax in that state and city or county. So if you have an office in Los Angeles, you need to collect sales tax. If you are uncertain whether or not your business qualifies as a physical presence, contact your state's revenue agency, unless you live in an exempt state such as Alaska, Delaware, Hawaii, Montana, New Hampshire or Oregon. If you do not have a physical presence in a state, you are not required to collect sales taxes from customers in that state.

But you also need to know for what items you need to collect sales tax.

If you are providing a service, you do not need to collect sales tax, unless that service uses something that you have created or manufactured if it is a tangible product. That means that down-able digital goods such as software or pdf publications are not taxable.

So here is where you have to be careful if you sell both tangible goods and digital goods. Sites like Squarespace do NOT let you set sales tax on individual products, (a really dumb move on their part) so you are stuck with either the same sales tax on everything, or on nothing. DO NOT use these sites. Also, if you are setting up an ecommerce site, make sure that you can get a listing of what taxes you have collected, something Squarespace also does not do well. So make sure that you do a test on everything before choosing a hosting site, and make sure they have the basics you need to run an ecommerce site.

Now is a good time to make sure everything is set up correctly on your site. Amazon has information on how to set up sales tax if you self publish through them, and it’s complicated, so check it out.

So get GYSTing, and have a really great 2017.