Minnesota Sales Tax for Photographers

by Tiffany BastianSep 24, 2022Sales Tax

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What is Sales Tax?

Sales tax is a tax placed on consumers by their state and local governments. Sales tax is charged to the consumer, calculated as a percentage, and added on top of your price.

How do you know if you are required to collect sales tax?

As a Photographer, you may be required to collect Sales Tax. To learn more about what Sales Tax is, read: Sales Tax Basics.

How to figure out your States Sales Tax Laws:

To begin, you have to ask yourself 3 questions…

1. Do I have Sales Tax Nexus in Minnesota?

The first step to determining if you need to worry about sales tax is understanding if you have sales tax nexus in a particular state, don’t worry, I’ll define that for you below.

2. Is what I’m selling taxable in Minnesota?

Next, you need to know that particular state’s sales tax source. This will give you the sales tax rate, which I’ll also define below.

3. What rate do I charge in Minnesota?

Lastly, you’ll need to know if what you’re selling is taxable in that particular sates. This falls into four categories: physical goods, digital goods, services, and shipping. Again, all are defined for you below.

DEFINITIONS

let’s first take a look at what each of these sale tax terms means so that you can understand how it pertains to Photographers in Minnesota.

👉NEXUS

So, what’s nexus? The term “nexus” is used in tax law to describe a situation where a business has a tax presence in a particular state. A nexus connects the taxing authority and a business that must collect or pay the tax. It’s possible to have nexus in more than one state, especially if you travel to another state to shoot. So you want to be sure you understand the laws of each state you work in.

👉SOURCE

The source indicates where the sales are taxed.

Origin-sourced sales are taxed where the seller is located, so this is based on your zip code.
Destination-sourced sales are taxed at the location where the buyer takes possession of the item sold.

Also, keep in mind if the client picks up tangible goods from your location or studio, this is the point where the transaction happens. If you mail or ship to the client, it will be by their zip, not yours.

👉PHYSICAL GOODS

Any physical products sold to a client, items you can touch and hold like prints, albums, frames, etc.

👉DIGITAL GOODS

These are digital items delivered electronically via telephone lines, over the internet, by email, or by another alternative form of non-physical transmission.
Beware of digital prints delivered on a physical device such as a thumb drive or CD as these are no longer digital and are now considered physical because you can touch them.
Services are anything needed to produce the end product, such as shooting, editing, culling, touchup, etc.

👉SERVICES

Services are defined as anything needed to produce the end product, such as shooting, editing, culling, touchup, etc

👉SHIPPING

This is any shipping charged by you to your client. Of course, third parties such as album companies that drop ship or online galleries where clients can order prints will take care of their own shipping. But if you charge your client shipping, this is where the shipping rules in this guide apply to you.