By In both Georgia and Colorado, the general rule is that sales tax applies to tangible goods and only to the services the law specifically lists. Neither state’s tax agency lists bookkeeping, accounting, payroll or tax preparation among the taxable services on the pages we checked, so under the general rule those services are normally not taxed. The details are where businesses get caught, so this guide shows what each state says and where you should check before you charge, or don’t charge, tax.
This is general information, not tax advice. Rules change and your facts matter, so confirm with your state’s Department of Revenue or a licensed tax professional.
Sales tax on services in Georgia
The Georgia Department of Revenue states: “Georgia imposes tax on the retail sales price of tangible personal property and certain services. While most services are exempt from tax, Georgia does tax the sale of accommodations, in-state transportation of individuals (e.g., taxis, limos), sales of admissions, and charges for participation in games and amusement activities.” It cites O.C.G.A. sections 48-8-2(31) and 48-8-30(f)(1).
What that means in practice:
- Taxable services in Georgia are the named ones: accommodations, in-state transportation of individuals, admissions, and games and amusements.
- Bookkeeping, accounting, payroll and tax preparation are not on the department’s list, so the general “most services are exempt” rule applies. If your situation is unusual, ask the department.
- Service providers can still owe tax on what they buy. The department says service providers are, in most instances, end users and liable for sales or use tax on tangible personal property they use to provide their service (O.C.G.A. section 48-8-63). A bookkeeping firm buying equipment for its own use is the typical case.
Sales tax on services in Colorado
The Colorado Department of Revenue’s sales tax guide says: “Colorado imposes sales tax on retail sales of tangible personal property. In general, the tax does not apply to sales of services, except for those services specifically taxed by law.”
Two points need care:
- Mixed transactions. The guide says that in a mixed transaction the entire purchase price may be taxable unless certain conditions exist. If you bill software, equipment or other goods together with a service, look at how the invoice is built before you decide what to tax.
- Home-rule cities. The Department says it does not administer and collect the sales taxes of certain home-rule cities, which run their own. The state guide does not tell you how those cities treat services, so check your city’s rules if you operate in one.
As with Georgia, bookkeeping, accounting, payroll and tax preparation were not named on the page we read.
What should a bookkeeper or CPA firm do about sales tax on services?
- Charge tax only where the law requires it. If a service is not on the state’s taxable list, do not add tax to the invoice.
- Separate goods from services on invoices so a mixed transaction does not make the whole bill taxable.
- Check your own purchases. Tax on equipment and software you use to deliver services may be owed by you.
- Check local rules in Colorado. A home-rule city may differ from the state.
- Keep the source. Save the Department’s page and the date you checked it.
If you sell into several states, see what economic nexus means and the nexus thresholds by state. For return preparation, see sales tax services. Texas has its own rules: see Texas sales tax filing.
Sources
Common questions
Is bookkeeping subject to sales tax in Georgia?
The Georgia Department of Revenue says most services are exempt and lists accommodations, in-state transportation of individuals, admissions, and games and amusements as taxable services. Bookkeeping, accounting, payroll and tax preparation are not on that list, so the general rule applies. Confirm unusual cases with the department.
Is bookkeeping subject to sales tax in Colorado?
Colorado's sales tax guide says tax generally does not apply to sales of services except those specifically taxed by law. The page we checked does not name bookkeeping, accounting, payroll or tax preparation. Check your city if it is a home-rule city.
What is a mixed transaction for Colorado sales tax?
A sale that combines goods and services. The Colorado Department of Revenue says the entire purchase price may be taxable unless certain conditions exist, so invoice goods and services separately.
Do service providers pay sales tax on what they buy?
Georgia says service providers are in most instances end users and liable for sales or use tax on tangible personal property they use to provide their service.