Hello, I'm new to this forum but I thought I would join since I recently started a new small business and I'm sure I will be needing accounting advise in the future. My business is a small video and photography production company. Here's a current question I am having:
When produce videos for clients there are a lot of expenses involved on top of my regular rates for producing (i.e. equipment rental, travel expenses etc.) Since I get taxed on these items naturally I bill my clients for the expenses as well as the tax I was charged for the expenses. Ultimately, the client pays the tax. When I create the invoice for the client, should I be applying the 7% NJ sales tax to the whole invoice or are only the services I provided taxable at this point? I would think the ladder since that would mean the state is ultimately receiving double tax on the rental or travel expenses.
When produce videos for clients there are a lot of expenses involved on top of my regular rates for producing (i.e. equipment rental, travel expenses etc.) Since I get taxed on these items naturally I bill my clients for the expenses as well as the tax I was charged for the expenses. Ultimately, the client pays the tax. When I create the invoice for the client, should I be applying the 7% NJ sales tax to the whole invoice or are only the services I provided taxable at this point? I would think the ladder since that would mean the state is ultimately receiving double tax on the rental or travel expenses.