If you are the owner of a new business, you may find that your sales tax obligations can be a bit time-consuming and complicated. However, working out your tax with the free sales tax calculator from TRUiC can make it easier for you to find out the tax rates for any location within the United States. You can also use the sales tax calculator to find the total cost of a sale, including the sales tax.
Sales tax basics
Most states, and some local governments, levy sales tax and require businesses to collect it from their customers. It is also known as sales and use tax. Not all goods and services are taxed in every state or city, and you will have to find out which applies to yours.
Every business that collects sales tax from its customers must then submit these to the state or local government agency.
If you have an online business or sell from catalogs to other states, then the TRUiC sales tax calculator can make it easier for you to find out what taxes you must levy on customers anywhere across the U.S.
The reason for this is every state has a different sales tax levy, and some do not have sales tax at all. It gets more complicated with some states that have no sales tax because there may be a few cities within them that do levy it.
How to register for sales tax?
Registering for sales tax is essentially how you gain a seller’s permit. You will also get a Resale Certificate on registration. The Resale Certificate allows you to buy items for resale without paying sales tax on them.
These permits are issued by each state authority to keep track of their revenues from sales tax. For you to register your business, you will need to provide your state’s Department of Revenue with some basic information concerning your business as well as your Employer Identification Number (EIN).
State policies on levying sales tax
Even as sales tax rates vary from state to state, some goods and services may not require sales tax to be paid on them.
Which goods are subject to sales tax?
Usually, sales tax is levied on tangible personal property. The most common goods that are taxable include books, computers, furniture, restaurant meals, home appliances, motor vehicles, and rental properties. In most states, there are a few “essential” goods that are not taxed at all and usually include basic groceries and medications.
Which services are subject to sales tax?
Personal services, business services, services to real property, and services to tangible personal property are usually liable to pay sales tax in most states. There may also be some tax-exempt services that include educational services, some medical services, and a few professional services.
How to calculate your sales tax obligations?
There are three types of sales that you will have to consider when you work out your sales tax obligations. These include your in-store sales, in-state sales, and out-of-state sales. It is easiest to work out the in-store sales tax for your business because they are all subject to the same sales and use tax.
Working out the in-state sales tax will be a bit trickier because you will have to determine if there is a state tax levied on a destination-of sale or origin-of sale for your state.
Destination-based sales tax is worked out according to the destination tax of the product within a state. If the city the product is sold to has a different tax rate than the city it has been sold in, then the item is taxed according to the destination’s tax rate.
On the other hand, if a state has origin-based tax, then the sales tax rate charged will always be the one where the seller is based.
Out-of-state sales require that you first determine where your business has a nexus or a physical presence. A nexus can include a physical location, an employee working remotely, a marketing affiliate, third-party seller drop-shipping, or a temporary physical location. Remote purchases are only levied with sales tax if a business has a nexus in the state the item is delivered to. Out-of-state sales are usually calculated based on the location of the customer.
Use the TRUiC sales tax calculator to work out your sales tax obligations for your store, state, or out-of-state sales. There are only two easy steps. The first allows you to look up the sales tax rate for any city in every state of the U.S. and the second one calculates the sales tax on the products.