California Sales Tax Increase Begins April 1

We all wish it were an April Fool's Joke...but it's not!

Don't worry, the Q-Community is joining together to survive the change.

Sales Tax can be a headache for business owners. Tax laws vary state-to-state and county-to-county.

To make it even more confusing, the State of California will enact a sales tax hike on April 1 that affects anyone who collects sales tax in California.

Q: How does California's sales tax increase affect invoices created/jobs booked after April 1?
A: You can apply the new sales tax rate for your district when you create a proposal or an order. Also, check proposals you've already sent to make sure they have the new sales tax rate, since your client may book the job after April 1!

Q: How does California's sales tax rate affect my existing invoices?
A: We did some research for you and discovered two potential solutions, outlined below.

ShootQ recommends you seek advice from a tax law professional before making a final decision. ShootQ cannot provide legal advice on applying sales tax.

Join the conversation on ShootQ's forum!

How to tackle tax changes on existing invoices?

Option 1: Charge the Sales Tax Rate that Existed Before April 1

According to an article published on the Board of Equalization website merchants may be exempt from charging increased sales tax rates for contracts executed before April 1.

However, according to the publication, sales tax must be explicitly defined in the contract. If you did not define the sales tax amount (in dollars) or rate (in percentage) in the original contract, you may amend the contract. For jobs booked online in ShootQ v1, or contracts done on paper, you will need to do an amendment outside of ShootQ. For example, consider sending a PDF amendment to all of your clients who booked before April 1.

If you decide to pursue this option, you can motivate clients to sign amendments quickly (before April 1) by informing them that they can save money on sales tax.

Option 2: Charge the New Sales Tax Rate

According to the California State Board of Equalization, merchants must collect sales tax based on the rate in effect on the date of delivery of goods. This means you probably need to retroactively apply the increased tax rate on your invoices for a job, if the goods will be delivered after April 1.

1. Navigate to the shoot that is affected.
2. Click the "Billing and Legal" tab.
3. Click the "Made a mistake?" link under the "invoices."
4. Click the "Recreate Order" button at the bottom of the page.
5. Follow the steps to recreate the order with the new sales tax rate.
6. Update payment information for payments that you have already received. Note: There will be a small unpaid balance left on these invoices because of the increased sales tax.
7. You may want to consider amending your contract if it explicitly states sales tax rates or amounts.

Option 3: Move to Delaware!

Where they don't charge sales tax :)

Comments

[Adam George]

Unfortunately, it looks like scenario 2 is the correct one:

http://www.boe.ca.gov/sutax/0401TaxIncrease_Video.htm

What a bunch of crooks. As you can tell, I'm pretty irritated about doing this to my clients, let alone the headache of invoicing, book keeping, etc.

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