How to Fit Sales Tax into Your Business

With more than 10,000 different sales tax rates nationwide, and these sales tax rates constantly changing, your business must keep up. If your business sells products or provides certain kinds of services to people within your state, you had better be sure to collect sales tax while you’re at it.

Exactly which services are taxed differs from state to state — check with your local tax authorities to find out whether the services you offer are subject to sales tax.

Only five states — Alaska, Delaware, Montana, New Hampshire, and Oregon — don’t have sales tax. All other states do have sales tax, and they expect you to collect each and every dollar and cent owed and then submit them to the appropriate tax authorities regularly.

Here’s how the sales tax setup and collection process generally works:

  1. File an application with your state sales tax authority to obtain a reseller’s permit.

    This permit is also known as a certificate of authority, sales tax permit, resale permit, or sales tax number, depending on the state where you reside.

  2. File appropriate sales tax forms with your state or local tax authorities.

    These forms include estimated collections for quarter or year (or whatever period of time requested).

  3. Receive instructions from state or local tax authorities with information on how often to submit tax collections and where to send them.

  4. Submit taxes at the time and place directed by the state or local tax authorities.

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