Sales Tax Ultimate Guide


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In today’s video we discuss when a company has to collect sales taxes for online and offline sales and how to collect and remit sales taxes. So let’s get started!

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Sales Tax Ultimate Guide

  1. Sales Tax The ultimate guide for Small business by
  2. How are Sales Tax regulated?
  3. Sales taxes are regulated on the state and local levels, and applied to retail sales to end consumers. While many cities do not have a sales tax, all but 5 states do have a sales tax.   Because they are regulated on the state and local level, the scope of products taxed and the exact tax rate will vary depending on the state, city, or county, in which the sale occurs.
  4. When does a Company have to charge a sales tax
  5. You only have to tax sales in locations where you have a physical presence. This means you will almost certainly need to register your company with your home state’s sales tax commission (full list of sites by state here) and city if applicable.
  6. To find out if your city has a sales tax and if so where to file search Google using the following format “My City + Sales Tax” and “My City + Filing Sales Taxes”.
  7. Defining “A Physical location”
  8. Establishing a physical presence in another state is known as creating a “nexus”, and it requires you to register with those states’ sales tax commissions as well. Unfortunately each state has their own definition of what a “physical presence” entails, so you can check this link for an overview of sales tax requirements for all 50 states.
  9. Internet sales shipped to states/ cities where you have not established a nexus will generally be exempt from sales taxes.
  10. Online Vs. in-person sales tax
  11. In general, you do not have to pay sales tax for online sales to states in which you have no physical presence of people or property. For example, if you are based in NY you would not have to pay sales tax to online orders from CA, you will only have to pay sale taxes to online orders from NY.
  12. For a guide to the internet sales tax regulations for your state, visit the 50 state internet sales tax guide here.
  13. Sales taxes on vendor sales
  14. Generally, sales tax only applies to transactions with end consumers. This means that items purchased by other vendors for resale are usually exempt. If a vendor asks for a sales tax exemption, make sure they provide you with a “resale certificate” or a valid reseller's permit that validates this exemption for your records.
  15. Common Exemptions
  16. The following things may be exempt in your state/city: ● ● ● ● ● ● ● Goods intended for resale Real property (land and buildings) Services Food, medicine, and some clothing Sales to the federal government Sales to non-profit, religious and educational organizations Items used in activities deemed in the public interest.
  17. How to collect sales tax
  18. You must first obtain a sales tax permit by registering with your state Department of Revenue (full list of state website’s here). This will require a Federal Employer ID Number, as well as additional information about your business and its owners. You should be able to register online in most states.
  19. Now you can begin accepting sales taxes on qualifying goods and services. When you make a sale, it is important that you show the tax amount separately on the receipt, so the customer can clearly identify the amount of the tax.
  20. How to Pay sales taxes
  21. You should track all sales taxes, and keep them in your liabilities account on your balance sheet. Make sure to track the due dates for your sales taxes, as they will vary from state to state. In most cases, sales taxes must be reported on a monthly or quarterly basis.
  22. Most states now allow you to pay sales taxes online, which is very convenient. You can find detailed information on how, when and where to file your state sales tax here. To Find out if your city has a sales tax and where to file them, search google for “your city + sales taxes”.
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