Sales taxes are levied by many cities, counties and states atvarying rates. Most provide specific exemptions, as for certainclasses of merchandise or particular groups of customers. Servicebusinesses are often exempt altogether. Contact your state and/orlocal revenue offices for information on the law for your area sothat you can adapt your bookkeeping to the requirements.
Before you open your doors, be sure to register to collect salestax by applying for a sales permit for each separate place ofbusiness you have in the state. A license or permit is importantbecause in some states it is a criminal offense to undertake saleswithout one. In addition, if you fail to collect sales tax, you canbe held liable for the uncollected amount.
If you’re an out-of-state retailer, such as a mail order sellerwho ships and sells goods in another state, be careful. In thepast, many retailers haven’t collected sales taxes on the sales ofthese goods. Be sure you or your accountant knows the state salestax requirements where you do business. Just because you don’t havea physical location in a state doesn’t always mean you don’t haveto collect the sales tax.
Many states require business owners to make an advance depositagainst future taxes. Some states will accept a surety bond fromyour insurance company in lieu of the deposit.
It’s possible for retailers to defer paying sales taxes onmerchandise they purchase from suppliers. Once the merchandise issold, however, the taxes are due. The retailer adds the sales taxes(where applicable) to the purchase. To defer sales taxes, you needa reseller permit or certificate. For more details on obtaining apermit, contact your state tax department.
