I have an upcoming opportunity to sell some images to a business. So, a few questions -
1. Should I obtain a sales tax license? I thought of doing so mainly so I could get wholesale pricing on framing/mounting.
2. Are there any legal ramifications to having a sales tax license?
Regarding galleries -
1. When approaching a gallery, do they expect that you already stock work ready to hang or does the gallery tell you in which format they'd like to see your work?
Hey Paul, I know there is people here alot more experienced at this than I am, but I'll tell you how I handle these things. I do have a City of Longmont and a State sales tax license. Even though photography isn't my primary income, I do sell images and photo cards wholesale for resale purposes, and also participate in Longmont Art shows/Artwalks etc, and show in Galleries. So for these reasons I have the licenses, it allows me to purchase supplies/Plaq mounting etc at wholesale prices, and of course to collect Tax on any sales directly to the public. For Art shows etc you are supposed to have a "Special Event License".
For galleries I'm pretty sure the regular Sales Tax licence would cover you for any sales, but I'm not real experienced in that, perhaps someone here with their own gallery could give us the scoop.
Nick is right on....you need two licenses---the state license, and the city license where you reside or have your business. The state license is the one that wholesalers such as moulding companies or art suppliers will want a copy of to sell to you at wholesale. Galleries will have their own license so you don't need one to do business with them as they will collect sales tax when they sell your work.
As to format, it depends on the gallery, but basically it needs to be framed. Whether the image is matted, floated, or extends right to the frame is basically up to you, in my opinion, but some galleries might want some input. And, I've had at least one gallery director say that how you present your work ("your look") is not quite, but almost, as important as the image itself. That may be a stretch, but it just points out how important a consistent presentation is. I have seen a resistance in high end galleries (that also carry paintings and sculpture, for instance) to so called canvas "gallery wrapped" photographs without framing. Most of them also have a resistance to photographs, but that's another issue.
My experience with galleries (I've shown in about a half a dozen over the past 10 years) is that if they are going to accept your work they will want to have a limited number of framed pieces in their inventory. Then, when (if) they sell one, they might request a replacement or different piece. Also from time to time they will want you to "refresh" what they are carrying---if something isn't selling after awhile, they want you to take it back.
My experience is that getting your work in a quality gallery is very difficult to start with, then getting ample wall space in the gallery for your work is even more difficult, and getting paid when something sells (because it's going to be there on consignment) can be a dicey proposition. I've been burned once to the tune of about $3,000 at one gallery now long out of business and had to literally show up at another gallery to pick up my work and not leave till the owner wrote a check for the missing pieces that he had obviously sold but hadn't informed me about.
That being said, I have a wonderful relationship with the gallery that carries my work here in Steamboat, Wild Horse Gallery---who provide ample wall space and pay immediately when something sells. Maybe it's because the two owners are also artists. So it's very gratifying and worth it if you can find the right situation. Sorry for the long dissertation, but I thought my experience(s) might be helpful.
I happen to be on the other side of the fence to a degree. I oversee the software side of the financial systems in Colorado Springs including the Sales Tax software and I'm doing some work in that system and team now.
A sales tax license is literally a license to collect sales tax on behalf of the government. Its not a wholesale purchase license, occupancy license, business license or anything else.
You can claim the hobby income and expense on your federal taxes without a sales tax license if you're selling through an organization that will collect tax for your sales. You'll probably also find that the local agency will be happy to collect sales tax from you in arrears of you don't have the license up front.
There are obvious advantages to setting up your business licensing since you'll have access to wholesale outlets and you won't pay sales tax on purchases for items you'll sell. You can write off expenses from the business as well. But on the other hand you may also be subject to use tax when you do not pay sales tax for your materials, but don't sell it either. By law, you are supposed to pay sales tax on that camera you bought from B&H even if it was for personal use. Enforcement is lax at this time, but that is changing as TABOR ratchets down on government revenue. If you've read the news lately, there's been a little talk about some moves for companies like Amazon to notify their customers of the requirement to pay sales tax on purchases where Amazon doesn't collect it. But if you didn't pay sales tax, your desk or camera could end up requiring use tax. So could frame molding if you don't end up selling it. I don't know all of the in and outs of this part of the law, but they are points worth considering. You also might be subject to filing regular sales tax returns with the licensing agency even if it is a zero filing.
If you work with a gallery, they must have a sales tax license with both the state and local government(s). You will not need to collect sales tax for your sales. It is the gallery's responsibility.
If you work something like an art fair, you would probably be better off to get a temporary sales tax permit. They may require a deposit/bond payment, and you'll have to file a report, but you won't have to do it on a regular basis.
As far as the galleries go, it can vary widely. Rod's comments are on the mark, but this is my experience and that of my artist friends. Sometimes you'll present a portfolio and they'll dictate which work they want to represent. Other times you'll be accepted to show based on a portion of your portfolio and be able to choose your own work to display. The gallery may have a framing preference. If its an eclectic or country style gallery, then mixed framing might be acceptable. If its a modern gallery, then a consistent framing style will identify the work as yours and I think its expected. A black or wood frame with a white mat is always an easy way to go, and it is required in a few galleries I've run across. But I prefer a different look for my own work. I would make sure to have an inventory list with the gallery including pricing. Have the gallery representative sign and date for their receipt of the inventory and both of you should have a signed copy of this document for your records. It helps in the situation Rod described. Keeps the good guys honest and gives you legal documentation against the bad guys.
You don't need a state sales tax license if your annual sales are under $1000.00 according to the instructions on the Colorado state gov. website. Otherwise both a state and local tax license will be needed.
A sales tax license does afford a business owner the ability to obtain wholesale items with tax exemption. In my experience at the old Bentwave Gallery, this tax exemption afforded me the ability to purchase framing materials for store stock and custom orders at wholesale rates so that I, a business owner, could actually turn a profit. Beyond that, its beneficial to purchase wholesale items as the goods aren't being taxed twice, which happens too often.
Not that any of this is relevant, but some of you recall my idea of having a photographic cooperative that would have been operated out of the gallery space. At the initial meeting, the issues surrounding individual licensure vs the cooperative's business structure was a big sticking point. This uncharted territory ultimately led the the demise of my intentions to bring photographers together to enjoy each others company, arrange group events, etc., but the business/legal/operational facets of the cooperative soured the idea, hence the subsequent closure of the space altogether. In hindsight, trying to make a business out of a hobby ruined the fun of photography, a message for some of you to consider....
In terms of gallery submission guidelines, read everything twice and don't leave anything out. One mistake and your application is quickly filtered. This also goes for art fair submissions. When they ask for a booth shot, they mean it.
Sorry to get off track, but I thought I'd chime in since I was involved in the gallery business for quite some time. It is an experience that combines all emotions; elation, frustration, doubt, moments of clarity, serendipity and times for reflection.
Discussion
8 replies1. Should I obtain a sales tax license? I thought of doing so mainly so I could get wholesale pricing on framing/mounting.
2. Are there any legal ramifications to having a sales tax license?
Regarding galleries -
1. When approaching a gallery, do they expect that you already stock work ready to hang or does the gallery tell you in which format they'd like to see your work?
Thanks for any advice.
Paul
For galleries I'm pretty sure the regular Sales Tax licence would cover you for any sales, but I'm not real experienced in that, perhaps someone here with their own gallery could give us the scoop.
Nick is right on....you need two licenses---the state license, and the city license where you reside or have your business. The state license is the one that wholesalers such as moulding companies or art suppliers will want a copy of to sell to you at wholesale. Galleries will have their own license so you don't need one to do business with them as they will collect sales tax when they sell your work.
As to format, it depends on the gallery, but basically it needs to be framed. Whether the image is matted, floated, or extends right to the frame is basically up to you, in my opinion, but some galleries might want some input. And, I've had at least one gallery director say that how you present your work ("your look") is not quite, but almost, as important as the image itself. That may be a stretch, but it just points out how important a consistent presentation is. I have seen a resistance in high end galleries (that also carry paintings and sculpture, for instance) to so called canvas "gallery wrapped" photographs without framing. Most of them also have a resistance to photographs, but that's another issue.
My experience with galleries (I've shown in about a half a dozen over the past 10 years) is that if they are going to accept your work they will want to have a limited number of framed pieces in their inventory. Then, when (if) they sell one, they might request a replacement or different piece. Also from time to time they will want you to "refresh" what they are carrying---if something isn't selling after awhile, they want you to take it back.
My experience is that getting your work in a quality gallery is very difficult to start with, then getting ample wall space in the gallery for your work is even more difficult, and getting paid when something sells (because it's going to be there on consignment) can be a dicey proposition. I've been burned once to the tune of about $3,000 at one gallery now long out of business and had to literally show up at another gallery to pick up my work and not leave till the owner wrote a check for the missing pieces that he had obviously sold but hadn't informed me about.
That being said, I have a wonderful relationship with the gallery that carries my work here in Steamboat, Wild Horse Gallery---who provide ample wall space and pay immediately when something sells. Maybe it's because the two owners are also artists. So it's very gratifying and worth it if you can find the right situation. Sorry for the long dissertation, but I thought my experience(s) might be helpful.
A sales tax license is literally a license to collect sales tax on behalf of the government. Its not a wholesale purchase license, occupancy license, business license or anything else.
You can claim the hobby income and expense on your federal taxes without a sales tax license if you're selling through an organization that will collect tax for your sales. You'll probably also find that the local agency will be happy to collect sales tax from you in arrears of you don't have the license up front.
There are obvious advantages to setting up your business licensing since you'll have access to wholesale outlets and you won't pay sales tax on purchases for items you'll sell. You can write off expenses from the business as well. But on the other hand you may also be subject to use tax when you do not pay sales tax for your materials, but don't sell it either. By law, you are supposed to pay sales tax on that camera you bought from B&H even if it was for personal use. Enforcement is lax at this time, but that is changing as TABOR ratchets down on government revenue. If you've read the news lately, there's been a little talk about some moves for companies like Amazon to notify their customers of the requirement to pay sales tax on purchases where Amazon doesn't collect it. But if you didn't pay sales tax, your desk or camera could end up requiring use tax. So could frame molding if you don't end up selling it. I don't know all of the in and outs of this part of the law, but they are points worth considering. You also might be subject to filing regular sales tax returns with the licensing agency even if it is a zero filing.
If you work with a gallery, they must have a sales tax license with both the state and local government(s). You will not need to collect sales tax for your sales. It is the gallery's responsibility.
If you work something like an art fair, you would probably be better off to get a temporary sales tax permit. They may require a deposit/bond payment, and you'll have to file a report, but you won't have to do it on a regular basis.
As far as the galleries go, it can vary widely. Rod's comments are on the mark, but this is my experience and that of my artist friends. Sometimes you'll present a portfolio and they'll dictate which work they want to represent. Other times you'll be accepted to show based on a portion of your portfolio and be able to choose your own work to display. The gallery may have a framing preference. If its an eclectic or country style gallery, then mixed framing might be acceptable. If its a modern gallery, then a consistent framing style will identify the work as yours and I think its expected. A black or wood frame with a white mat is always an easy way to go, and it is required in a few galleries I've run across. But I prefer a different look for my own work. I would make sure to have an inventory list with the gallery including pricing. Have the gallery representative sign and date for their receipt of the inventory and both of you should have a signed copy of this document for your records. It helps in the situation Rod described. Keeps the good guys honest and gives you legal documentation against the bad guys.
A sales tax license does afford a business owner the ability to obtain wholesale items with tax exemption. In my experience at the old Bentwave Gallery, this tax exemption afforded me the ability to purchase framing materials for store stock and custom orders at wholesale rates so that I, a business owner, could actually turn a profit. Beyond that, its beneficial to purchase wholesale items as the goods aren't being taxed twice, which happens too often.
Not that any of this is relevant, but some of you recall my idea of having a photographic cooperative that would have been operated out of the gallery space. At the initial meeting, the issues surrounding individual licensure vs the cooperative's business structure was a big sticking point. This uncharted territory ultimately led the the demise of my intentions to bring photographers together to enjoy each others company, arrange group events, etc., but the business/legal/operational facets of the cooperative soured the idea, hence the subsequent closure of the space altogether. In hindsight, trying to make a business out of a hobby ruined the fun of photography, a message for some of you to consider....
In terms of gallery submission guidelines, read everything twice and don't leave anything out. One mistake and your application is quickly filtered. This also goes for art fair submissions. When they ask for a booth shot, they mean it.
Sorry to get off track, but I thought I'd chime in since I was involved in the gallery business for quite some time. It is an experience that combines all emotions; elation, frustration, doubt, moments of clarity, serendipity and times for reflection.
So, with that, MAKE IT WORK!!!
CGR