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I do realize companies contemplate on costs and taxes before setting a budget for their logo, brand stationery and promotional designs – and this is a plausible way to strategize the allocation of their resources. Nevertheless you mustn’t shun the idea to brand your Fintech business only because design services and products may or may not be taxable. Let’s discover the relationship between tax and your design budget for the year.
A Fintech’s Brand Design Budget
In The FINTECH Book: The Financial Technology Handbook for Investors, Susanne Chishti and Janos Barberis elucidate that “the nature of financial services imposes specific challenges to designing great experiences.” If this is the case, when you begin to allocate a budget to brand your Fintech, it is important to know your web presence especially on mobile can influence the success of your business in a digital-savvy world.
While you need an ingenious logo design to confirm your existence along with visual marketing aids to promote your company and products, the prongs of a Fintech business are: a website and an app. They help you to a) establish a unique selling proposition to set yourself apart from competition; b) build an attractive, strong and memorable brand image to ensure sustainability in the market; c) lure clients towards products and services that promise quality and security; d) provide extraordinary user experience; and e) nurture customers into loyal fans and brand ambassadors.
What’s The Best Price For A Logo?
As ridiculous as it may sound, a logo design can cost you between $5 and $10,000. For a startup, anything from $199 to under $500 is a good point to start a logo design project with a credible professional. Obviously this price difference comes with disadvantages and advantages. Fee for a logo design generally depends on quality, approach and the process of design.
The price of the logo will vary with:
- Choice of service (freelance, crowdsource, and agency)
- Design style or trend (minimal, retro, and classic)
- Type of logo (mascot, emblem, and logotype)
- Mode of file transfer (sharing software)
- Number of drafts (rough and final)
- File types (.jpg, .gif, .svg, . png, .ai)
You don’t need to settle for a super cheap design because it offers no originality whatsoever or any legal protection rights. Going for an extravagant option is unwise for a budding business unless you are reaping golden eggs.
How Much For A Website?
The price of a website design depends on whether you want a web template, web design, web development or an all-in-one option. Apart from the user-interface, you pay for user-experience that includes hosting, troubleshooting and restoration. A custom web design can start at $300 and rise above $8000. This depends on:
- The web designer and/or the agency you pick
- Budget allocated for your Fintech’s web presence
- Monthly upgrades and debugging from virus and errors
- Your budget you’ve kept aside for branding and marketing
- Single product or a package with design and development
- Plug-ins like JAVA and Flash that embellish websites
Web pages with simple HTML will cost you less than with CSS – but then again what’s a website without visual hierarchy?
Don’t assume an expensive design will be better than the one that cut your pocket off a few hundred dollars. Your invoice doesn’t simply include the exact worth of the website, it also has Goods and Services Tax percentage mentioned if the agency or designer is registered for it, and most importantly it includes expenses of creating and sharing your design.
How To Spend On An App Design?
Before we evaluate the price of a mobile app design, it is important to note what goes into the making of it.
There are three stages to this:
- Information research and analysis based on user personas and A/B testing,
- Prototyping, which includes user-experience, concept validation and usability testing
- Visual design that sets the aesthetics of an application – the look and feel
From simple to complex, an app creation is priced between $250 and $20,000 but this depends on app size, level of user-interface, social media engagement, billing or e-commerce, external APIs and integrations, and security.
Impact Of Tax On Fintech’s Design Budget
While we know branding is essential and budgeting is a prerequisite, I was curious if tax in any way will affect your Fintech branding budget. Stay put, this is what I discovered.
#1 Do Regions Have Different Provincial Tax Laws And Federal Tax Laws Regarding Design?
In Ontario, Retail Sales Tax does not apply on website design if the project is transferred electronically to the client, there’s no hardcopy, and no taxable program is included in the site. On the other hand in Saskatchewan, another Canadian province, Provincial Sales Tax is charged from clients for the software, computer services, website design and development.
Tip: study the tax percentage of the region you reside in.
Verdict: yes, where your business is located will have an impact on your design invoice.
#2 The Spring Budget For Freelance Designers In The U.K. – Is It Good Omen For You?
Just last week the spring budget delivered by Chancellor Philip Hammond seemed back-breaking for freelance designers. As per that announcement, freelancers would have had to pay 1% higher personal tax that is approximately £368 a year. This would’ve consequently escalated prices on your brand design invoice. However Hammond “scrapped plans for a National Insurance tax rise aimed at the self-employed”, Tom Banks of Design Week reported.
Tip: always analyze your design invoice before making a payment.
Verdict: well, freelancers won’t have the tax excuse to increase their prices and inflate your budget.
#3 Sales Tax Is Applicable On Tangible Products. Are Services Counted?
According to the Pennsylvania Department of Revenue Act 84 of 2016, “the sales and use tax specifically extends to items delivered to a customer electronically or digitally or by streaming unless the transfer is otherwise exempt.” Prior to this, graphic/web/app design services were excluded from being subject to sales tax if the work was transferred digitally.
Tip: make sure you have a look at tax applied on crowdsourcing services.
Verdict: Non-tangible product designs/redesign is also liable for tax – keep that in mind when budgeting.
#4 Is Creating Digital Artwork For Customers Is Taxable Under Fabrication Labor Charges?
As per a publication by the Board of Equalization, California titled Graphic Design, Printing, and Publishing – labor that creates new products like “finished art, illustrations, brochures, printed matter, prints, or printing aids are generally taxable” whether materials are supplied by the designer or the client. In Maryland restoration and repair of an existing item such as a photo edit or logo redesign is also subject to tax.
Tip: look out for the price to pay whether you design or redesign your branding.
Verdict: services are expenses are taxable unless you ‘do it yourself’.
#5 Will Payroll Tax On In-House Designer Or Freelancers Affect Design Budget?
As startup, founders try to do branding and marketing themselves but as you grow – you need helping hands. You have to bear taxes if your Fintech’s creative department decides to hire an in-house full-time or part-time graphic or web designer. To avoid payroll tax, you can opt for a freelancer but they too have a bunch of costs to cover and Personal Income Tax to pay. Before you approach a design agency (with a physical location), make sure you know their expenses and tax liabilities will affect the price they charge you. This means your budget needs to expand than if you settled with a freelancer or online design services company. Even a brand consultation is considered as a legitimate business expense by the Internal Revenue Service.
Tip: you can simply outsource the design for your Fintech.
Verdict: designers are your business resource and these assets incur tax as per IRS.
Also Explore: 10 iOS/Android Apps to Ease the Burden of Tax Time
The Truth – Budgeting And Tax In Fintech Brand Design
By the looks of it, it seems tax does have an impact on your brand design budget plan. It turns out the amount you allocate for a logo design, website, mobile application or any other branding or promotional item depends on several factors such as the country or city you assign the project in, the costs and taxes levied on clients, designers and agencies, and the changing policies of law makers. In this case, I recommend Fintech businesses to be aware of the types of taxes directly or indirectly related to them. It’s time to talk about such things!
How does tax affect your brand design budget?
- Government of Saskatchewan. Provincial Sales Tax Act. (2017)
- Ontario Ministry of Finance. Ontario Budget. (2016)
- Pennsylvania Department of Revenue. State Tax Summary. (2016)
- Pennsylvania Department of Revenue. Are Graphic Design Services Taxable? (2016)
- Tom Banks. Design Week. National Insurance Tax on Freelancers. (2017)
- Board of Equalization, California. Graphic Design, Printing, and Publishing. (2017)
- Peter Franchot. Comptroller of Maryland. Fabrication and Labor Charges
- JUX Law Firm. Sales Tax on Advertising & Creative Promotional Services in Minnesota