Should You Be Charging Sales Tax to Your Customers?

In addition to all the recent talk about Federal and State taxes over the last few weeks, let’s switch over and talk about 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. Additionally, 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. 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.

What States Don’t Have Sales Tax?

There are always exceptions! Five states in the USA have no sales tax: Alaska, Montana, New Hampshire, Delaware, and Oregon. If you live in one of these states, you may still have tax responsibilities in other states. Read more about this in this post.

Too Busy to File Sales Tax?

Too busy to worry about sales tax filings? I hear you! I use (and love!) a service that does this automatically for me. Read my full review in this post.

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