This week in our GROW series I thought I would cover everyone's favorite topic...taxes. First things first, once you have a legit photography business you need to get a business license and register your business with the BOE (California State Board of Equalization). These are the fine folks that you will be paying your sales and use tax to every quarter. If you are a photographer outside of California please check your state tax laws (use tax is applicable in 22 states).
Everyone should be familiar with sales tax, but not everyone knows about use tax. Use tax is not new, in fact, the California use tax law became effective in 1935. Use tax hasn't been a hot topic in California until recently, as our state is low on funding and they are really cracking down. Let's say you buy a $1,000 camera online from B&H Photo. They are "not engaged in business" in California so they do not charge sales tax on the camera, making your grand total $1,000. Many photographers buy things from these online companies thinking they are saving the extra money on paying sales tax, but they are actually required to pay use tax because they are using the product in California. So, for example, the use tax in Orange County on the $1,000 camera would be $77.50 and you would pay this when you file with the BOE.
We have a local camera store that we buy most of our equipment from & that develops our film for us. We love having a store within driving distance & being able to support another local business. Now that we purchase from a local store, we don't have to worry about filing use tax that often. If we do see something offered cheaper at B&H, we just show our local camera store their competitors price and they usually have no problem matching it. This makes our life much easier :) I hope this helps you understand use tax a little bit better. Let's face it, use tax is not fun, but it's something you have to pay if you want to run an honest business.