Do consultants charge tax? It’s a legitimate question. Whether or not consultants charge tax depends on many factors.
Your location – Do consultants charge tax?
In order to determine whether you should be charging tax as a consultant, make sure you’re heeding advice that pertains to your own country and state or province. If you’re in the United States, the easiest way to determine whether to charge tax is to contact the Internal Revenue Service, as well as your state. If you’re in Canada, contact Service Canada and your provincial government.
Don’t simply go by what other consultants are charging. Get tax information straight from the source.
Your client’s location – Do consultants charge tax?
Whether you charge tax will also depend on the location of your clients. If you offer services over the web you may have to charge different taxes to different clients depending on their location.
Your services – Do consultants charge tax?
The type of taxes you charge may depend on the type of services you offer. Once again, get guidance straight from the source! Be sure to clearly indicate which services are taxable on your invoice.
Your income – Do consultants charge tax?
The taxes you must charge may depend on your income. Because your income will change over time, be sure to reevaluate your taxation policies on a semi-annual basis.
As you can see, the answer to whether you should charge tax depends on your location, your client’s location, the type of services you provide and your income. When in doubt, contact the government in your area or seek advice from your financial advisor regarding whether to charge taxes.
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