Sales Tax for Service-Based Businesses: Do You Need to Collect It?
Many service-based businesses don’t have to worry about collecting and remitting sales tax, but depending on your industry and location, you might be required to. Understanding sales tax laws is crucial to avoid unexpected penalties and ensure compliance.
Which Service Businesses Typically Don’t Collect Sales Tax?
Most states do not require sales tax on professional services like:
✅ Consulting & Coaching – Business, marketing, and life coaching services
✅ Photography & Videography – In some states, digital-only photography may be tax-exempt
✅ Marketing & Design Services – Graphic design, branding, and advertising services
✅ Health & Wellness Services – Personal training, massage therapy, and nutrition coaching
However, rules vary by state, so it’s important to check local tax regulations.
Which Service Businesses May Need to Collect Sales Tax?
Some states require sales tax for certain service-based industries, including:
✅ Photography & Videography – If you deliver physical products like prints, albums, or USB drives
✅ Graphic Design & Printing – If you sell printed materials, not just digital design
✅ IT & Software Services – Some states tax software, web design, or digital downloads
✅ Cleaning & Home Services – Some states require sales tax on janitorial or home maintenance services
Since sales tax laws differ by state and industry, always check with your state’s Department of Revenue or consult a tax expert.
How to Collect & Remit Sales Tax
If your service business is required to collect sales tax:
1️⃣ Register for a Sales Tax Permit – Apply through your state’s tax agency.
2️⃣ Charge Sales Tax on Invoices – Use QuickBooks Online to automate tax calculations.
3️⃣ Track & Report Sales Tax – Set up monthly or quarterly reports.
4️⃣ Remit Tax to the State – File and pay by your state’s deadline to avoid penalties.
Get Sales Tax Right for Your Business
Not sure if you should be collecting sales tax? Book a free consultation today, and let’s make sure your business stays compliant!
📅 Let’s start Doing Business Right! 🚀