Learn more about keeping your business compliant with sales tax requirements.
Resellers, such as department stores, grocery stores, automobile dealers, and catalog sellers, are in the business of buying goods and reselling the same goods. Resellers purchase items and then sell those items substantially unchanged. Generally, resellers to do pay sales tax when they purchase the items, but must collect sales tax when those items are sold to the end user.
Although shoppers in 17 states can save some money by taking advantage of upcoming back-to-school sales tax holidays, these holidays are anything but a vacation for retailers. Here are six steps retailers should take to make the sales tax holiday less stressful.
Retailers need to be prepared in the 16 states offering back-to-school sales tax holidays to motivate late-summer shopping.
Unless you live in one of the five states that don't impose sales taxes, you have had some experience with paying sales tax as a customer. However, as a small business owner you need to be aware of your sales tax obligations: what is taxable; how the tax is computed and calculated; and how sales tax is reported and paid.
When it comes to sales taxes, most of the compliance responsibilities fall upon the seller. If your business happens to make taxable sales of property or services, you need to be prepared to handle the obligation to register with your state's department of revenue; compute the tax; collect the tax; and pay the tax to your state.
Of all the tax obligations you face as a small business owner, few have as much of an impact on the day-to-day operation of your business as the sales tax does
Traditionally, sales tax applied only when goods, not services, were sold. This has been changing and now many service providers need to collect and pay over sales. tax.
Although most states do not impose sales tax on construction services, contractors must be aware sales tax rules when they purchase and bill for supplies that they use. Lump-sum contracts and time and materials contracts can create very different sales tax obligations.
In every state, certain types of items, most commonly food and medicine, are exempt from sales tax or are taxed at lower rates. Certain types of sales transactions are exempt from sales tax, not because the item itself is nontaxable but because of some characteristic of either the buyer or the seller.
The main target of sales tax laws traditionally was retail sales of tangible personal property. However, more than half the states now tax some types of services. And, nearly all states impose sales tax on leasing exemptions. Each state usually has numerous types of times that are exempt from tax. Most often prescription medication or food is nontaxable or subject to a lower tax rate.