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Matt Adams
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Harvest, AL
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Uh oh...yep, I'm going there! I know there are tons of rules and regulations regarding taxes. I just want some help from KNOWLEDGEABLE people. So basically, if you don't know for sure, please refrain from commenting on this topic.

Ok, here goes:

1) I live in AL
2) I perform primarily in AL, GA, FL, MS, and TN

I have an AL business license for legerdemain and can perform anywhere in AL. I then pay AL state income tax on my earnings.

2 questions:

1) Do I have to pay state income tax on EVERY state I perform in? That seems extreme. Or would it just be paying my AL tax at the end of the year.
2) I want to start selling simple kid tricks. Do I have to pay state sales taxes to every state I perform in? Or can I just pay the AL sales tax at the end of the year as well?

Thanks to those who know!
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Skip Way
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The fella to ask is Steve Snyder at http://www.thetaxmagician.com . Steve is a working magician and a tax specialist.
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MikeHMagic
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Skip you beat me to the punch, I just spoke to him over the weekend.
Mike "Gus" Harvatt
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Skip Way
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Great minds...! Smile
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ScottRSullivan
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I wouldn't mind hearing from others on this, too.

From what I've been told, you pay state income tax in each state in which you perform. If you sell tricks, you pay sales tax in that state, too.

It would be awesome if I'm wrong!
Matt Adams
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Harvest, AL
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Hmm, I forwarded my 2 questions to him. We'll see what he says. Thanks guys!
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Dannydoyle
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Ask on an accounting web site.
Danny Doyle
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Al Angello
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By all means pay your taxes, but is it necessary to have an Alabama business license to perform in Alabama? In my state such a lecense is only required if you sell products at you shows.
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TomBoleware
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Al,
Here is the general rule in most states, of course each person should check
with their own city/state:

1. You need a business license if you using a name other than your own.

2. You need a sales tax permit in order to collect sales tax on items you sell.

Generally, with state and federal tax, if you travel out of state and work,
and the amount is reasonable small, you simply add it to your own state total and nobody gets upset.

Dealing with taxes outside your own state can get complicated,
so yes you do need to talk to a tax expert if you going from state to state.

Tom
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Al Angello
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Oh I get it since I use my own name I never needed a state license, which explains for bigger jobs they want my social security number.
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Dannydoyle
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Usually over $500.
Danny Doyle
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ScottRSullivan
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Quote:
On 2010-08-09 22:16, Al Angello wrote:
Oh I get it since I use my own name I never needed a state license, which explains for bigger jobs they want my social security number.


You might want to look into getting an EIN. It's free and saves you the security risk of using your social security number. You can get one on the IRS site easily.
JordanB
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You do not always have to pay state income tax in states in which you perform. Some states (Texas, Florida, Tennessee…for example) have no state income tax. The reason state taxes are so tricky is that each state has its own rules unlike the Federal government which has one set of rules (albeit very complicated rules).

The general rule is that you will only have to pay state income tax on money earned in that state. The states apportion the income based on where the income was earned. The home state generally taxes all income, but will give credit for taxes paid in other states. Again, this is just the general rule and not every state subscribes to these rules. States walk a thin line to avoid Constitutional limitations on multi state taxation. State and local taxation can become very complex. If you are a C-Corp then it gets even more complicated.

As for whether or not you need to collect sales tax….well, it depends.

I am working on my Master’s Degree in Tax and I have a Bachelor’s degree in accounting. I also work in the tax department of a large company. It can really get complex. I can tell you that in my opinion, state taxes are much more difficult area in some respect than Federal taxes.

The best advice is to talk to a CPA in your state. Be sure and talk to someone who has experience with multi state filings and sales and use tax filings. Most mid size CPA firms have clients that operate in surrounding states, so you should be able to find one without much trouble.
Matt Adams
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Al: yes, it IS necessary to have a business license to do business. You'll need to check with your state/county to see what is required of you to operate as a performer. Additionally, I'd recommend the EIN as well. It's free and easy to get (can do it online). By the way, I believe the EIN is required for a business license.
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Paddy
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Quote:
On 2010-08-10 11:23, mattadamsmagic wrote:
Al: yes, it IS necessary to have a business license to do business. You'll need to check with your state/county to see what is required of you to operate as a performer. Additionally, I'd recommend the EIN as well. It's free and easy to get (can do it online). By the way, I believe the EIN is required for a business license.
Maybe in your state you need a license to do business. I have been in business full time for 15 years and do not have a license. The reason is that I am an entertainer and do not sell any product, ergo no sales tax in OH, KY, or IN. I keep meticulous records because I am a sole proprietor and must prove my income and expenses. Never had a problem filing my quarterly tax forms and paying quarterly.
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Steven Steele
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In California, business licenses are not issued by the State. If you don't use your name you have to file and publish a Fictitious Business Name statement. And if you want it protected you have to do a bunch of other stuff on top of if.

If you are going to sell merchandise, then you have to get a Resale License from the Board of Equalization so that you can collect sales tax.

As far as business licenses they are issued by Counties and Cities, but not all of them have them. I live in a city that required a business license, and next to two that don't.

As everybody else says, this issue gets complicated very quickly; so a tax expert is needed if you are going to be going into these areas in other geographies.
TomBoleware
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Steven, I think that is true in most all states.
In most places the business license is more a city/county thing.
It has nothing to do with your state or federal taxes.

If you call city hall or the county court house they will
gladly sell you one. They want all the money they can get. Smile

Tom
Do What Others Do And You Will Become Average

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Ed_Millis
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My city wants a license; my county doesn't require it. More for zoning and tax issues than permissions. But it also helps "validate" you for certain venues and opportunities.

Ed
magicman02
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So if you are travel a lot and perform all over the country, and each show is in a different state, do you have to pay taxes in every one of those states or just file one tax return in the state where your business is registered at the end of the year and pay federal and state tax in the state you operate in?
TomBoleware
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Quote:
On 2010-08-10 18:47, magicman02 wrote:
So if you are travel a lot and perform all over the country, and each show is in a different state, do you have to pay taxes in every one of those states or just file one tax return in the state where your business is registered at the end of the year and pay federal and state tax in the state you operate in?


Yes for state taxes. You have to use a nonresident state tax form for each state, if that state requires you to pay a state tax.
(Not all states do) Also, the amount (percentage) for each state will vary.

As for as Federal taxes, no problem, you just add it all together.


But again, each person should talk with a local tax person about their own tax.


Tom
Do What Others Do And You Will Become Average

The Daycare Magician Book
www.amazekids.com/magic-downloads/childrens-magic-ebooks/the-daycare-magician/

Tom Boleware
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