Sales Tax Solutions 2000

You may also charge your clients for labor associated with a taxable sale. For purposes of calculating sales tax, labor charges are generally divided into three basic categories: fabrication, repair, and installation. In general, tax applies to charges for fabrication labor, but not to charges for labor considered repair or installation. Nontaxable labor charges should be itemized separately on your invoice. Source: California Department of Tax & Fee Administration (CDTFA) Course:   https://salestaxsolutions2000.com/california-sales-tax-interior-designers

Many designers and decorators charge a fee for professional services. Typical services include consulting, design, layout, selection of color schemes, coordinating furniture and fabrics, supervising installations, etc. The fee may be a negotiated fixed amount or a percentage of the selling price of furnishings, labor, and installation charges. Tax does not apply to charges for professional services that are not directly related to the sale of merchandise. Be sure to list those charges separately on your invoice. However, tax does apply to your charges for fees that are directly related to acquiring and providing furnishings and other merchandise you sell to a client. For example, when you charge fees to accompany a client to a showroom to select furniture the client is buying from you, those fees are taxable. Normally, an interior decorator’s selling price of furnishings should be the retail price — that is, the cost to the decorator plus a reasonable markup. However, decorators so...

You generally must pay sales tax on the sale of merchandise to your clients, including the sale of samples and finished drawings or plans you transfer to clients.  You owe tax based on the retail selling price of the merchandise, including your markup and any related taxable labor and service charges. Special tax rules apply to the sale of items that you or a subcontractor attach to real property (houses, apartments, commercial buildings, etc.), including carpeting, wallpaper, paint, and cabinets. Source: California Department of Tax & Fee Administration (CDTFA) Course: https://salestaxsolutions2000.com/california-sales-tax-interior-designers

Cabinets You may contract with a client to install cabinets in a home, store, office, or other building.  For sales and use tax purposes, some cabinets are considered materials and others are considered fixtures.  Each cabinet in a project must be evaluated individually. Custom Cabinets Cabinets are considered custom and treated as materials if you incur less than 90 percent of the direct cost of related labor and materials in fabrication and installation of the cabinet before the cabinets are attached to your client’s building.  The application of tax to your charges for materials depends on how you contract with your client. Prefabricated Cabinets Cabinets are considered prefabricated and treated as fixtures if you incur at least 90 percent of the direct cost of labor and materials in fabrication and installation of the cabinets before they are attached to your client’s building.  In this case, you are considered to be the retailer of the cabinets and tax will appl...