Sales Tax
SALT: Register With States Where You Conduct Business
Even if the company doesn't have a physical location within a state, in order to sell taxable items and collect and remit sales tax, in most cases, the company must have a business license in the state.
Apr. 17, 2015
Do you have clients who are selling items or services that are subject to sales tax outside of their home state? If so, it is likely that these clients are required to register in the states where they are doing business so that they can collect and remit sales tax. In addition, many states have locally administered taxing requirements in cities and counties that require separate registration.
Even if the company doesn’t have a physical location within a state, in order to sell taxable items and collect and remit sales tax, in most cases, the company must have a business license in the state. Contact the state department of revenue for information on filing a business license application. After the application is filed, the state will send the company a tax registration number.
Businesses that are selling items sporadically or occasionally within a state must still register to do business there and must still collect and remit sales tax. For example, a business that travels to a state once a year to sell taxable items at an annual fair is still required to collect and remit sales tax.
Avalara has prepared a list of questions that will be useful if you are helping your clients apply for a business license:
* What is your business activity?
* What are your expected annual sales?
* Will you be selling goods to customers?
* Do you or will you have employees within 90 days?
* Will your business use a name that is different from the owner or corporation name?
* Have you ever been acquired by another business or have you acquired a business?
* Where is your business located? This includes the physical location of your business or warehouse and the location(s) where you sell your products or provide business services.
* What is your ownership type (i.e. sole proprietor, profit corporation, LLC, etc.)
Check the state websites as some states allow online registration. The Federation of Tax Administrators provides a map that provides links to all of the state revenue department websites: http://www.taxadmin.org/fta/link/default.php?lnk=10#.
At present, every state has its own rules about who is taxable, under what circumstances they are taxable, and what items and services are taxable. While there is legislation afoot that could make the taxation process more uniform across state lines, for now, decisions are still made on a state-by-state basis.
* Note that if you use or plan on using a state and local tax software service such as Avalara, that software company likely will be able to help you obtain registration forms and might even prepare the registrations for you.