Many states in the U.S. collect sales tax. Generally, laws allow businesses to add this tax on to whatever good or service they are selling.
But, as a copywriter, do you need to collect sales tax?
Like many things when starting out as a copywriter, this one can be easy to overthink and worry about. However, it’s an easy one to solve.
What Is Sales Tax?
Sales tax is a pass-through tax, which means the tax passes through onto the customer during a transaction.
Okay, so then who pays sales tax? And who has to collect sales tax? Customers, not businesses, pay sales tax. However, business owners must collect, deposit, and report the sales tax.
Your State Determines Your Sales Tax
First, whether you need to collect sales tax depends on your state. Forty-five states and Washington, DC have some type of state sales tax. Some states even have different sales tax rates or rules for local taxes or online sales.
Second, if your state does have sales tax, you’ll want to dig into the laws. Many states do not require certain categories of businesses to collect sales tax.
Whether or not you need to collect it will depend on what you’re selling (copywriting services), your business location, and the location of your clients.
As of this writing, there are five states that do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. The others, plus Washington, DC, do have laws around sales tax.
Hawaii, South Dakota, New Mexico, and West Virginia tax most services, though there are a few services that are exempt.
Regardless of where you live, you’ll want to look into local laws and make sure you’re complying.
Where to Get More Information
The Federation of Tax Administrators has links to every state’s Department of Revenue so you can determine what, if anything, you need to do.
And, if you do need to pay sales tax, build it in your rates. Check with your accountant if you need to have it as its own line item or not.
Note: We are not legal experts or tax preparation professionals, so always consult an accountant, tax prep professional, or attorney if you have concerns. This information is aimed at copywriters in the United States. Copywriters in other locations may find this information useful for determining what questions they need to ask and answer based on their country, region, or city.
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Your Turn
Do you have to pay sales tax where you live? What are your tips?
Last Updated on March 12, 2024
In Canada, we have both federal and provincial sales tax. The federal portion (GST) does not need to be collected until you’re earning $30k annually, but you can volunteer to remit before that and claim back any GST you’ve paid in business expenses. The provincial portion depends on the province you live in. In BC copywriting is exempt from PST, but it varies province to province and depends on whether your province charges HST (an amalgamation of the PST and GST) or not. Definitely check with a tax pro to see what you’re responsible for in your province.
Such valuable, important information. Thank you, Shannon!
I talked to a CPA about paying use tax inter-state and even he couldn’t give me a simple answer. It seems different for every state and depends on where the client is, not the service provider. Comprehensive solutions like Avalara are geared towards larger businesses so are cost-prohibitive. Thankfully it would be unlikely that I would reach nexus in any state (though I think there are one or two states that have a zero threshhold). But would take a lot of research to confirm. Maybe I need to find another CPA.
We are sorry you are having a hard time getting a concise answer. In our experience this is something that a tax expert should be able to advise on.
I used the term “use” tax when I meant “sales” tax in my previous comment. Basically, taxes on services when relevant.