Your requirement as a business to collect sales taxes from your customers depends on these factors: If you are a taxable entity (called a tax nexus) in your state. If you sell online, you will need to look up the specific requirements for collecting sales taxes as an online seller in each state.

How to collect, report and pay state sales taxes?

Here are the main steps in the process of preparing to collect, report, and pay sales taxes. Begin by determining whether you must collect sales taxes in a specific state (the tax nexus question). If you sell online, you will also need to check to see if you need to collect and pay sales tax on these online transactions in your state.

What do you need to know about sales tax exemptions?

Most states offer product-specific exemptions on items that individuals must purchase, including food, medicine and medical devices. In some states, these items are taxed at a lower rate. Most states also offer an exemption from sales tax for occasional, casual or isolated sales, such as a garage or estate sale.

Can a state collect sales tax from an out of state seller?

To protect small businesses from the complexity of multi-state taxation, the federal government provides limitations on how states can tax the sale of goods across state lines. The Supreme Court has established that states cannot require out-of-state sellers to collect taxes from their customers unless they have a nexus within that state.

How many tax collection entities are there in the US?

It has been estimated that there are 11,000 tax collection entities in the U.S., so determining and collecting sales tax can be very complex The Tax Foundation has a downloadable table of state sales tax rates. Set up your processes to collect sales tax from your customers.

What do you need to know about sales tax?

Everything you always wanted to know about sales taxes, including how to register for sales taxes, what products and services are taxable, tax rates in each state, sales tax vs. excise taxes, sales taxes vs. use taxes, sales taxes in online transactions, and sales taxes on out of state sales.

Why do I need to know my client’s tax status?

You need to find this out to determine your client’s filing status and possible exemptions. Don’t just go by what your new client says their filing status is – it may be incorrect. You want to ensure they are filing properly.