When working with freelance designers, you have a lot to consider. In many cases, freelancers can cost less than traditional employees. But you may want to know if they charge things like sales tax.
In general, freelance designers don’t charge sales tax because they offer services and not physical products, but it can vary between states. However, a designer may charge sales tax if they sell a physical item, such as a design print. Be sure to consider the work and location to determine if they will charge sales tax.
Whether you’ve hired a designer before or not, you should consider all of the costs. You may not have to pay employment taxes on freelancers, but sales tax is different. Keep reading to learn more about designers and sales tax.
Sales Tax Rates
The sales tax rates can change, so they may go up or down depending on the year. However, it helps to get an idea of the sales tax rates. That way, you can know how much you’ll have to pay for a given service.
As of early 2021, Tennessee had the highest sales tax rate of 9.55%. Delaware, Montana, New Hampshire, and Oregon didn’t have sales tax at all. Alaska had the lowest tax rate that wasn’t 0%, and the state’s rate was 1.76%.
These numbers include state sales tax as well as local sales tax. Be sure to ask your freelance designer if they also have to collect local sales tax. Then, you can estimate your total cost based on the service and all applicable taxes.
Including Sales Tax
Before you hire a freelance designer, you may want to consider if they will include sales tax in their overall rate. When you buy products, you usually have to pay sales tax on top of the total that the items cost.
Some freelance designers may run their businesses the same way. So you can expect to pay the rate they quote you as well as the sales tax. For example, if you hire a designer in Tennessee for a $1,000 project, your total may end up being $1,095.50.
Knowing if the designer will charge you more in tax may not seem like a big deal. But as you hire for bigger projects, you can see that you may owe a lot more. Then, you can make sure you can afford the total amount.
If you’re on a tight budget, tell your potential freelance designer. They can let you know the total with sales tax. In some cases, the sales tax may make you rethink hiring a particular designer. You might choose someone else or no designer at all.
Design Services vs. Products
When buying from a freelance designer, you will probably hire them for a service. You may order a custom logo or some other design materials. That can be a great way to get the designs you need to start or grow your business.
Of course, you can consult your state and theirs regarding sales taxes on services. Then, you can figure out if you will owe extra money.
However, you might buy a design product from a freelancer. Some freelance designers will sell templates, prints, and other products. In that case, they will need to follow the sales tax laws for products, which can differ from that of services.
If you purchase design templates from a designer in a state with no sales tax at all, you will just need to pay the listed price. But in most cases, you can expect to pay some state or local sales tax when buying a design product.
Is It Worth Hiring a Freelance Designer?
Before you hire a freelance designer, you may wonder if it’s worth it. Design rates can already be quite high, and sales tax can make the total that much more expensive.
In many cases, hiring a freelance designer is worth it. You may need to pay sales tax, but you won’t have to pay employment or payroll taxes like you would with an employee. Even if you hire someone who charges a high sales tax rate, you could still come out ahead.
Of course, you can also do some basic design yourself. Tools like Placeit.net make it easy to create simple designs that you can use in your business.
As your business grows, so will your design needs. At that point, it can be worth using tools to generate your own ideas. Then, you can hire a designer to flush them out and make them look unique and on-brand with your business.
How Much Do Freelance Designers Charge?
Along with an overall fee and potentially sales tax, freelance designers shouldn’t have a ton of fees. When you hire a freelancer, you can expect to pay either a flat rate per project or an hourly rate for their work.
If a designer charges hourly, you may pay anywhere from $25 to about $150 per hour. A designer with more experience will be closer to the top end of that range.
Some designers prefer to charge project rates. That can be nice when working with a designer because the price you pay won’t change. Consider pricing for some common design projects:
- Logos: $100-$5,000
- Business cards: $100-$2,500
- Illustrations: $90-$465
- Infographics: $100-$2,000
- eBooks: $200-$2,500
The price you pay for these services depends on the designer’s experience, location, and demand for their services. Some designers may charge a rush fee if you need them to finish your project quickly.
Freelance designers can be very helpful for you and your business. But be sure to keep the total cost in mind when setting up a project.
Freelance designers can charge a lot for their expertise and their craft. Before you hire one, you should consider all potential costs, including sales tax. Not all freelance designers charge sales tax, but some have to, depending on where they live. Be sure to ask a designer if they include sales tax in their pricing to get a full idea of the cost.