Should I Start Charging Sales Tax?

General
1

Hi, I am a web developer that builds and manages websites for small businesses. I live in Connecticut, but a lot of my clients are out of state and in the future I may even have some out of the country. I’m pretty sure my services (web design/development, website management/hosting, etc.) are taxable in CT. I registered with DRS just in case I needed to start collecting. My clients pay me through a Stripe subscription.

I haven’t hit the nexus yet but I think I might in the future. It also seems like you can’t really go back and start collecting sales tax on subscriptions that have already begun. So I’m wondering if I should just start having Stripe collect sales tax now on new clients moving forward in preparation for when/if I do hit the nexus?

Also, since many of my clients are out of state do I have to register to remit sales tax in their states as well if I hit the nexus there or does it all just count as me selling from CT and all my sales tax goes to CT DRS?

2

Your type of business seems to be very much service related and not sales of any tangible goods that are taxable. Easiest way to find out is to call a CPA in CT and ask as most of us here will not be super familiar with your state rules, but generally speaking you are earning money by performing services and not by selling goods so you are exempt from any sales tax. Only a few states require sales tax on specific services but I do not believe yours qualifies for any of them. I would highly suggest that you find a CPA tax preparer with good reviews as it could mean a 2-minute phone call that won’t cost you a dime or at most a 30-minute meeting with a CPA that should not cost you a lot. You’re not selling any products, just your time and knowledge basically.

3

@Maxwell
Where would I be able to find a CPA that I could call for free?

4

Ira said:
@Maxwell
Where would I be able to find a CPA that I could call for free?

There aren’t any. It may cost and this is part of running a small business.

5

The earlier you do that the better.

Refer to Connecticut Gen. Stat. § 12-407

"Computer and data processing services including but not limited to charges for online access to computer services, services to create, develop, host or maintain all or part of a website,… "

6

@West
I already mentioned in my post that I believe my services are taxable. My question was concerning whether I should start collecting sales tax given I haven’t hit the nexus.

7

Ira said:
@West
I already mentioned in my post that I believe my services are taxable. My question was concerning whether I should start collecting sales tax given I haven’t hit the nexus.

The earlier you started collecting sales tax and remitting/reporting correctly, the better.