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!

1. Sales Tax
The ultimate guide
for Small business
by FitSmallBusiness.com

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:
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●
●
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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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