Read Now State of California Tax Guide for Advertising Agencies PDF
As an advertising agency, you develop and implement ideas to promote a client’s products and services. The way sales tax applies to your charges depends on 1) your business relationship with the client; 2) the product you provide to the client; 3) whether the product you provide is produced in-house, and 4) your billing method. You may act as the agent of your client on some jobs and act as a retailer on other jobs. You may also act as an agent with respect to the acquisition of some products for your client and as a retailer of other products on the same job. Some of your sales will be taxable and others will not. This chapter discusses the rules that apply when you purchase products and services on behalf of your clients and helps you determine when you are regarded as a retailer and how tax applies to your sales as a retailer. The next chapter explains what sales are generally nontaxable. Specific information about your sales as a retailer is provided in the other chapters. Services and products Advertising agencies provide both services and tangible products to their clients. As an agency, your services include such things as planning, media placement, market research, advertising, radio spots, and public relations. Your products include such items as print ads, brochures, logos, posters, artwork, video productions, and website design. When you sell tangible products, tax will generally apply to your sale of the products as well as any charges for services associated with the production of the products. When you sell services only, your charges are generally not taxable.
