Hello,
I give estimates and invoice to clients based on a fixed price. Of course, I have an hourly rate and before, I try to figure out how many I will work.
I have a client now, who wants to be invoiced for number of hours I worked on his project.
On invoice, should I add taxes or not? Should I include taxes in my hourly rate, so when I bill clients in this way, to provide them the bill without taxes?
We haven’t agreed before on this matter. What’s the way to go when you work hourly?
What taxes? Services/intangibles are not subject to sales tax in most states, are they in yours?
9% in Washington state.
Sales tax would probably not apply to your invoice as it’s for a service. You can generally check with your state’s tax agency if you have a question.
If for some reason your service does face sales tax you would likely pass this to the client (and if not you would note it but then discount the amount to show them the impact).
If you’re located in the United States, services are not taxed. I’m not familiar with local Washington laws, but the state sales tax rate of 9% probably does not apply to services, only tangible goods.
Sales and use tax laws are different in every state. Many of them do have services which are subject to tax, but web design is not in most.
In Kansas, designing a website is akin to designing software and for the last ten years we’ve had to charge sales tax for EVERYTHING involving a website (design, copy writing, programming, etc.). That was quite a shock when we were audited.
Dan and Ted: I’ve heard from Texans that they have to charge sales tax on services. Possibly also in TN. I know that in GA, you don’t.
The OP’s best bet is to call their state department of revenue sales and use tax division and ask them for a list of activities (and geographic limitations on those activities) that require sales tax collection and filing of monthly paperwork.
Absolutely. Every business should investigate their tax situation with a qualified CPA or local tax documentation.
I have no idea if you need to charge for taxes because I’ve never done business in Washington, but here’s a link to a Google Answers post that has other links to some resources that might help:
I know, that’s why I continued my statement in the rest of my post, which you left out of what you quoted me on. It always depends on the state, and it would definitely be wise for him to investigate further.
You said that services are not taxed in the USA, then you go on to say that you’re not sure what the situation in Washington is.
Last time I checked, Washington was in the USA. I think it was good of Dan to clarify that point as your statement was contradictory and confusing.