Invoicing inquiry for US agency owners:
I’m preparing invoices for my initial permanent placements, but I’m a bit confused about sales tax.
As a New York City-based agency invoicing a client in Virginia, what taxes (if any) should be included on the invoice?
RCadmin
When it comes to invoicing for services like perm placements, sales tax can be a bit complex, especially given the multi-state nature of your situation.
Service Taxability: Generally, most states do not impose sales tax on services, including recruiting and staffing services. However, it’s important to check both New York’s and Virginia’s tax regulations to confirm.
Nexus: As you’re based in NYC and invoicing a client in Virginia, you’ll want to consider whether your business has nexus (a tax presence) in Virginia. If you don’t have a physical location or significant business operations there, you may not be required to collect Virginia sales tax.
Out-of-State Sales Tax: Because you’re providing a service to a client in another state, you typically wouldn’t be liable for collecting sales tax, as the service itself isn’t taxable in most jurisdictions, but you should double-check the specific rules in both states.
Consult a Professional: Given that tax regulations can change and vary widely between states, it’s always a good idea to consult with a tax professional or accountant familiar with multi-state business operations. They can provide guidance tailored to your situation.
In summary, for your scenario, it’s likely that you won’t need to add sales tax to your invoice, but confirming the specifics with a professional is the best approach.