Question about my pricing

[2WheelPhoto]

you have not paid taxes on your profit

Who says she has made a profit? Lots of assumptions in these posts. She may have revenues, but she also has expenses that she can deduct, including depreciation on her equipment which memoirshots alluded to in his post. She may be claimed on her parents' tax return as a college student (again, lots of assumptions in the responses to this thread). If she's not claimed by her parents, then if she claims herself her personal exemption would exceed her taxable income and again, she may not owe taxes.

Too many assumptions in these answers to give her really clear guidance on her issue.

I'm not even convinced she's "being sued" as she stated. Based on what I've read, she's in an argument with a client but there has been no lawsuit filed. What person would file a lawsuit where the damages are negligible? What a waste of time and energy.

One question. If you charge for your services and part of your service is to supply pictures. Are you taxed on the sales of the individual pictures or just the income from the service you provide? If just for the service. Would that make the cost of the pictures part of your supplies and there for a deduction.

shhhhhh I've done a few shoots and charged "just my expenses" because I'm in the process of making it all legal and another disclaimer is I'm still a student heh

 

[Rephargotohp]

One question. If you charge for your services and part of your service is to supply pictures. Are you taxed on the sales of the individual pictures or just the income from the service you provide? If just for the service. Would that make the cost of the pictures part of your supplies and there for a deduction.

I am assuming you are talking Income tax and not sales tax.

The entire amount is booked as Sales or Revenue and then depending on on your accounting method (Cash or Accrual) the cost of the prints (your costs not the customer's costs) are either booked as Cost of Good sold or as Business Expenses. which are subtracted from Gross Sales and after other business expenses give you Your net income which is taxable

 

[Rephargotohp]

Also to clear up a few things about how much trouble she is in.
She probably doesn't owe any taxes if this was one of the few job she did and it's not April 15th so she still has time and hasn't broken any tax laws.

As Far as Sales tax, if she "Collected" sales tax and didn't remit it, she would be in trouble. If she didn't collect sales tax, in the state off Ohio it would then be up to the purchaser to submit it as a "Use" tax. Remember that business do not pay sales that they merely act as a pass through agent for the state

This is not to say she doesn't need to fulfill certain legal obligations to operate as a business, but I doubt she is in big trouble as may have been suggested and I am not taking the onus off of her to do so

 

[MSnowy]

One question. If you charge for your services and part of your service is to supply pictures. Are you taxed on the sales of the individual pictures or just the income from the service you provide? If just for the service. Would that make the cost of the pictures part of your supplies and there for a deduction.

I am assuming you are talking Income tax and not sales tax.

The entire amount is booked as Sales or Revenue and then depending on on your accounting method (Cash or Accrual) the cost of the prints (your costs not the customer's costs) are either booked as Cost of Good sold or as Business Expenses. which are subtracted from Gross Sales and after other business expenses give you Your net income which is taxable

Ok A painter paints my house. He charges for his services and pays an income tax. Does he also pay a sales tax on the paint when I pay him?

 

[KmH]

Sales tax laws vary widely by state. Check what the rules are in your's.

 

[Rephargotohp]

One question. If you charge for your services and part of your service is to supply pictures. Are you taxed on the sales of the individual pictures or just the income from the service you provide? If just for the service. Would that make the cost of the pictures part of your supplies and there for a deduction.

I am assuming you are talking Income tax and not sales tax.

The entire amount is booked as Sales or Revenue and then depending on on your accounting method (Cash or Accrual) the cost of the prints (your costs not the customer's costs) are either booked as Cost of Good sold or as Business Expenses. which are subtracted from Gross Sales and after other business expenses give you Your net income which is taxable

Ok A painter paints my house. He charges for his services and pays an income tax. Does he also pay a sales tax on the paint when I pay him?

As Kmh said, It varies by State whether Services are Taxed and also There are some services that are and some that aren't

In a lot of Cases BUT NOT ALL, since a Tangible product is attached to the service(the paint or a Print) The entire sale is subject to sales tax. (many states are all or nothing)

YOU would pay Sales tax on your purchase with the painter ( The PAINTER does NOT pay sales tax on the paint he purchased for the job since it is for resale") He does pass along the sales tax you payed to the state taxing authority.

That is what MAY happen depending on your state

 

[MLeeK]

One question. If you charge for your services and part of your service is to supply pictures. Are you taxed on the sales of the individual pictures or just the income from the service you provide? If just for the service. Would that make the cost of the pictures part of your supplies and there for a deduction.

I am assuming you are talking Income tax and not sales tax.

The entire amount is booked as Sales or Revenue and then depending on on your accounting method (Cash or Accrual) the cost of the prints (your costs not the customer's costs) are either booked as Cost of Good sold or as Business Expenses. which are subtracted from Gross Sales and after other business expenses give you Your net income which is taxable

Ok A painter paints my house. He charges for his services and pays an income tax. Does he also pay a sales tax on the paint when I pay him?

Here: NO-it is a capital improvement on your home. The paint is only non-taxable as a capital improvement when it is "installed" for you by your painter who is a legitimate business.
HOWEVER-if you go to the store and buy paint it is just paint, it's not installed in your home as an improvement so you pay sales tax. Confusing as sh!t right? Capital imporvements are one of the exceptions to the rule though. It's not that way with many things.
So if you had a painter paint your car-yes. It's all taxable. The service is a luxury service that is resulting in a tangible good. It's taxable. The paint is a tangible good. It's taxable.

Now with photography where I am at if I sell any tangible good in the package deal the entire thing is taxable. However if I sell only the photographer service it is not taxable. If the client purchases a tangible good down the road, then that is taxable.
HOWEVER... one of the previous states I lived in if the client purchased a tangible good down the road then they paid sales tax on the goods AND on the service because it resulted in a tangible good down the road... Try keeping that straight in the books.
In some states a digital file sent via internet is NOT a tangible good. In some states it is. Any digital file put on a cd, jump drive, memory card... is a tangible good.
IF you deliver something by drop ship out of state... they are supposed to pay the sales tax to their state (there's a place on most state income tax forms to pay any sales and use tax on goods bought out of state.)
It's INCREDIBLY varied and an incredible PITA. If you are ever in doubt if something is taxable-just tax it. They don't complain when you overpay. But they get a little snippy when you underpay or don't pay.

 

[lovemygsd5]

I know you have had a ton of comments here and you probably have a lot of thoughts running through your mind. I worked for a professional photographer early on and learned all the important factors. I haven't read pages 3 and 4 so I may be repeating some posts. Remain professional at all times, no matter how difficult it is. Ask her what it will take to make her happy and just do it to get her out of her hair. Cut your losses and move on because she isn't worth the headache and aggravation. Draw up a statement stating what she agreed to settle for and have her sign it. Then good riddence. I bought the studio I worked for then and ran it until 2008 when the economy finally put me out of business. I will be glad to offer you advice if you wish (take it or leave it). I have been in the business now for 14 years photographing weddings, families, children, seniors and even photo restoration. I keep my license updated, I collect and pay sales tax every month. What is your major in college?

 

[Kra_Ash]

I have done my taxes for 2011 from this shoot since it was done in December. She has been my first client so far so I have done taxes since they needed to be done by like end of January is what my dad told me. So that's taken care of. I did act professional all the way through with her even when she was cussing me out I was telling her, there's no need for that, I'm trying to work with you here. I cut ties with her. Since she didn't show up like she said she would, just wait and see if I get anything in the mail from her, which I doubt at this point.
My major in college is a associates for art (don't know the correct terms for it off the top of my head) I plan to go to another college after I'm done at this one I'm at since it's a community college and have been told I should go somewhere else after.

 

[MLeeK]

I have done my taxes for 2011 from this shoot since it was done in December. She has been my first client so far so I have done taxes since they needed to be done by like end of January is what my dad told me. So that's taken care of. I did act professional all the way through with her even when she was cussing me out I was telling her, there's no need for that, I'm trying to work with you here. I cut ties with her. Since she didn't show up like she said she would, just wait and see if I get anything in the mail from her, which I doubt at this point.
My major in college is a associates for art (don't know the correct terms for it off the top of my head) I plan to go to another college after I'm done at this one I'm at since it's a community college and have been told I should go somewhere else after.

You are still missing the point on taxes. It is NOTHING TO DO WITH INCOME TAXES!!! That which you did in december and January is income tax. This is not filed with income tax in any way, shape or form. It goes to the state and nowhere near where your state income tax goes. This is TOTALLY different. Someone posted the links here. You need to find out what your college offers for the Small Business Association or the Small Business Development Corp. because I don't know how we can explain this any clearer to you.
When you go to the store the tag says an item is $9.99. When you pay the bill at the check out counter it actually is $10.79. That extra 8%? THAT!!! You have to charge and pay sales tax on goods and services.

 

[tirediron]

I have done my taxes for 2011 from this shoot since it was done in December. She has been my first client so far so I have done taxes since they needed to be done by like end of January is what my dad told me. So that's taken care of. I did act professional all the way through with her even when she was cussing me out I was telling her, there's no need for that, I'm trying to work with you here. I cut ties with her. Since she didn't show up like she said she would, just wait and see if I get anything in the mail from her, which I doubt at this point.
My major in college is a associates for art (don't know the correct terms for it off the top of my head) I plan to go to another college after I'm done at this one I'm at since it's a community college and have been told I should go somewhere else after.

You are still missing the point on taxes. It is NOTHING TO DO WITH INCOME TAXES!!! That which you did in december and January is income tax. This is not filed with income tax in any way, shape or form. It goes to the state and nowhere near where your state income tax goes. This is TOTALLY different. Someone posted the links here. You need to find out what your college offers for the Small Business Association or the Small Business Development Corp. because I don't know how we can explain this any clearer to you.
When you go to the store the tag says an item is $9.99. When you pay the bill at the check out counter it actually is $10.79. That extra 8%? THAT!!! You have to charge and pay sales tax on goods and services.

Never mind the minor issue in your OP, you need to learn business and FAST if you're going to charge for your work. Take down your shingle, and put it away. Go DIRECTLY to your local adult-ed/community college/night school and enroll in any and all small business/entrepreneurship courses they offer. You might take fantastic photos, but if you don't know one tax from the other, you're very likely to wind up in a world of hurt sooner than later.

 

[raider]

i think everyone is missing the core issue. facebook photos are indicative of beginner level photos that should be priced rather low. the customer may have had a valid complaint. this happens way too little - no one wants to offend the 'photographer' by saying that they're not happy with their product. most people don't know what makes a technically good photo, if they're in it they think its great. if you're charging and offering professional services, there should be a minimum standard. especially if the customer was expecting the quality of actual professional level photos. and its obvious you jumped into 'business' waaay too soon. i say take em all to court and thin the herd. people are getting ripped off.

 

[Kra_Ash]

She got her 6 pictures. She's not getting anymore. I cut ties with her. I'm not going to bother with any court issues or anything unless something else happens.

 

[lovemygsd5]

Are you looking to pursue photography as a career or is it something to just something you plan to bring in some extra living expenses? If you get some decent training you can make a good amount of extra money. Also, take some business management classes to help you on that end. It is equally important. Always keep good records and all your sales receipts. I can help you with pricing, etc. Just let me know.

 

[lovemygsd5]

MSnowy, painter may pay sales tax when he purchases the paint, but doesn't charge you sales tax because hes providing a service to you. Sales tax isn't typically charged on service, justs goods. Now, he may pass the sales tax along to you by means of covering his cost. It may vary from state to state.