Who Should You Collect Business Sales Tax From?
 Legally,
you need to collect business sales taxes in every state that you have a
physical presence. That means if you have any portion of your business
located in that state, you need to collects taxes on every item sold in
that state.
A "physical presence" means any presence
at all. That could be an office, a store, a warehouse, or even a
manufacturing facility. Some large companies are able to work around
that by setting up a separate business to handle their Internet sales.
That way they get away with not charging business sales tax to their
customers even though they may have a store in that state. One place
the business sales tax laws get tricky is if you use affiliates to sell
your products online.
There has been a change in the laws in some
states to consider an affiliate a physical presence. That means that if
you have an affiliate selling your product in a state like North
Carolina you will be required to collect business sales tax from your
customers in that state.
How Much Business Sales Tax Do I Charge?
Once
you have determined which states you will need to collect business
sales tax in you will need to figure out how much to collect.
Unfortunately, the business tax rates change not only from state to
state, but also from county to county. Some cities impose their own
sales taxes on top of that. That's where things get tricky.
If
you have a physical store that you are selling from, you would need to
charge the proper sales tax for that store. If you have stores in
multiple locations, you would need to determine the correct business
sales tax to charge for each of those locations.
 There are some websites such as GeoTax (http://www.geotax.com/USTaxLookup/)
from Pitney-Bowes that will tell you what the business sales tax is for
any location you want. All you have to do is fill in the address form
and the site will give you the current business sales tax rate.
Another
place to find current business tax rates is to go to your local state's
website. Find your state's Department of Taxation. They will usually
have the tax rate broken down by county.
Don't forget to
check back periodically for updated business sales tax rates. These
rates get changed from time to time, so you want to be sure to stay up
to date with the latest sales tax rates.
How Do I Collect Business Sales Taxes?
In order to collect business sales tax from your
customers you will first need to register your business with every
state you are collecting taxes in. You will need your Federal ID number
to register your business, as well as information about your business
and where it is located.
Many states are set up to allow you
to register online. Go to your state's website and fill in the required
information, and then you will be set to begin collecting business
sales taxes on the items you sell.
You need to be sure to
show the sales tax on a separate line on your receipt. You cannot just
show a total with the tax included. You must show exactly how much you
are collecting in sales tax.
Check with each state you are collecting
sales taxes in to find out how often you will need to pay the state the
taxes you have collected. Many of the states will base the payment
schedule on the volume of sales you do. If you do a smaller volume of
sales you may only have to pay the state sales taxes quarterly. If you
have a lot of sales you will probably have to pay the taxes monthly.
Once
you have everything set up dealing with business sales tax is not
difficult. It is something you have to stay on top of, but it is just
another cost of doing business. Make sure you keep your sales tax rates
up to date, and get those payments to the state in on time.
Points to Keep in Mind
- You need to collect sales tax in every state where your business has a physical presence.
- Sales tax rates vary from county to county, and sometimes from city to city.
- Tax rates change periodically, so you need to check on new rates.
- Some
states have affiliate laws that require you to charge business sales
tax in any state where you have an affiliate selling your products.
- You must register your business in every state that you are collecting sales taxes in.
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