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Although I offer the Freelancer's FAQ information free of charge, I'm finding that the costs of operating a web site are steadily increasing. If you find this information useful, a donation would be gladly appreciated.
Anne W.

Anne Wallingford, WordSmith

 

Freelancer's FAQ



FEDERAL TAX IDENTIFICATION NUMBER
and
STATE SALES TAX REPORTS


CAVEAT: The following information is meant as a guideline. Information is based on research as well as input from my webmaster, Dick Johnson. For further information, contact your state's tax office.

In general, unless you are a partnership, LLC, or corporation, you do not need a federal tax identification number. You can use your Social Security number.

Payment of state sales tax depends on your sales and your state's regulations. In general, if you sell a product, you usually have to pay sales tax. If you sell a service, you may not have to pay a sales tax. For example: you sell finished photographic portraits. The service you provide—photography—may not be taxable, but the finished product is. Because regulations vary greatly from state to state, check with an accountant who is familiar with the tax laws in your area.

The time frame for payment of sales tax also varies by state. Some states may only require quarterly payments. However, companies with high volume sales may have to make daily submissions. In some cases, filing must be done electronically; filing paper returns, with a check, may not be an option.

To further complicate matters, tax rules and regulations vary not only from state to state but there may be variances within individual states depending on the county and/or the city. Your place of business may be in one location but you may have to pay sales tax elsewhere if your customers aren't in the same location as your business.

Again, your best bet is talk to an accountant who is familiar with the tax laws in your area. You may or may not need a federal tax number. You might just need a state sales tax license and be able to report sales under your Social Security number.



Please feel free to share your ideas about this topic, send me a message—click on the link below. - Anne W.

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Friday, August 10, 2007