Welcome to tax week here at Cutting for Business! This week will help you understand your tax responsibilities in your Silhouette or Cricut based business. To start, we are looking at sales tax.
What is Sales Tax?
Sales tax doesn’t cost your business anything. Instead, you act as the middleman and collect sales tax from your customer and submit it to your state. Currently, for items sold online and shipped to customers out of your state (or out of a state that you formally do business in) – there is no sales tax. When selling to a customer in your state, you will need to charge them sales tax.
How to Collect Sales Tax and How Much to Charge?
To begin collecting sales tax, you will need to register with your state’s Department of Revenue. Registration can generally be done online. The sales tax amount that you charge will vary depending on the state you live in and the sales tax structure that they operate upon. Some states use an origin based rate (tax amounts are determined by where you live); while others use a destination based rate (tax amounts are determined by the destination of the buyer). In addition to the state sales tax rate, your county or city may have additional sales tax surcharges. For example, in my home state (Florida) the sales tax rate is 6% and my county (Osceola) has a 1% county surcharge for a total sales tax rate of 7%.
How and When to Submit Sales Tax?
Again, your state’s Department of Revenue will be able to provide you specific details on submitting your sales tax. In many states, new filers pay sales tax quarterly – but other common sales tax due dates are monthly or yearly. Remember to record your sales tax due dates in your favorite planner. Some states will provide on time filers with a credit for filing on time, while others have high late fees for filers who don’t file on time.
There are always exceptions! Five states in the USA have no sales tax: Alaska, Montana, New Hampshire, Delaware, and Oregon.
Tomorrow, we are moving on to types of taxes in your Silhouette or Cricut business.