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We have graphic design services company, and sell t-shirts. Do we have to file taxes on services and the supplies?

Full Question: We have graphic design services company, and is going to be selling handmade t-shirts in the future. We applied for the state tax ID in GA, and we got a letter saying that I need to be paying taxes monthly for the first six months. Incomes are through services only, and we used the tax id to get t-shirt supplies. No t-shirt sales yet. Do we have to file taxes on services? and the supplies? We sell shirts that are not customizable at the moment. But we hand make them, so we make our shirts as we receive the order. But the designs on them are consistent. The service we provide is separate from our tshirts, we do graphic design services for logos, websites, etc.

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Answer:

Diane Yetter photoThe sale of the shirts, even though they are hand made are sales of tangible personal property and you must collect sales tax on the selling price of the shirts. Any supplies that go into the shirts are exempt for resale and you should provide your resale certificate to your suppliers. For the graphic art services that you provide, if you are only providing the creative services, these charges are generally not subject to tax in GA. However, if you transfer the design onto an item of property and sell the property to the customer, then you are likely a retailer. This includes arranging for and procuring printed matter, collateral (mugs, calendars, hats, shirts, etc). Any materials you purchase that you use in providing your graphic design service is taxable when you purchase it. If you purchase tangible items and resell these items with the design on it to your customer, then you should issue your resale certificate and charge sales tax on the selling price of the item.

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