Question on sales taxes for remote jobs. IE) I’m in Iowa and have a client in Illinois that I’m doing remote work. When I bill for things that need sales tax, should i be using my office location or their office location? by default my QBO uses the company’s billing address and I can switch it to my office however i want to know what i should change my default to. If i sell them hardware like a server that I’m shipping to my house, configuring, then brining it on site, is that different or the same?
It’s best to consult a tax expert / your accounting firm as they will know the laws in your jurisdiction.
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you generally need to charge sales tax based on the location of the customer (Illinois, in this case). If you’re selling hardware and shipping it, the tax rules might be different, as you may need to charge based on where the item is delivered . It’s best to check with a tax professional to make sure you’re handling it correctly for each situation.
Speaking as a CPA, sales tax is always charged where the benefit is received. When I was with IBM Global services, taxes on MSP services were always based on where the end user sat. For large managed services deals we would have to apportion the invoice according the number of end users in each state. WRT hardware, if you are a re-seller, there should be no tax charged to you when you purchase the hardware, and you would be responsible for charging tax to the purchaser in the state where the equipment will be delivered to the purchaser.
But as others have said, be sure to engage a tax pro, and keep them on retainer. You want someone to stand by you when the sales tax people come to audit you. There are a lot of nuances to this, and once you get to be large enough, you will have the sale tax people from both jurisdictions constantly in your hair.
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