Go To Great Panes, Kathryn Maloney ©2008


Starting a business in NY? These two sites will help you find out what you need to do it properly:

New York State’s Online Permit Assistance and Licensing website
See “Click here to start” for a questionairre of what types of issues your business may be involved with, and it will present you with your filing requirements and advisory sheets.

The hardest part of using this cool tool is the first step–picking your business type. The design for this section is really poor, and after a lot of clicking I settled on Craft/Hobby Vendor for my business:

http://www.nys-opal.com

NYS Sales Tax
In NY you must register with the Dept of Revenue to collect sales tax for both your on-line sales and for live events:
http://www.tax.state.ny.us/sbc/starting_business.htm

You should also contact your county offices to be sure you know what local business laws there might be in your area.

Also see the links on the right for more info on the IRS, Sales Tax and NY business, including:

The IRS Website–Links for Businesses
http://www.gotogreatpanes.com/blog/2008/01/08/the-irs

In New York your Certificate of Authority to Collect Sales Tax is needed before you can collect sales tax from in-state customers.

If you sell taxable items from New York State (NYS) should have one regardless of how little you sell, or whether or not you consider yourself just a hobby and not a business. You then remit the sales tax to NYS according to the schedule NYS gives you. It’s quarterly the first year, then the frequency is determined by the State based on how much you collected the first year.

Your Certificate of Authority to Collect Sales Tax is also what gives you the ability to purchase certain goods without paying sales tax. You can buy as a reseller, buy supplies and tools for use in producing tangible personal property that you will sell and buy some promotional materials without paying sales tax.

To purchase eligible items without paying sales tax, you need to fill out and present the proper form–see below. Most stores will keep a copy of your filled out form on hand if you will be buying from them regularly, others want a copy for each purchase.

You should never photocopy or otherwise reproduce your Certificate of Authority to Collect Sales Tax.

Resale Certificate: ST-120
If you are buying items that are for direct resale–you won’t be making anything from them, just selling them as-is.
PDF Instructions & Form ST-120:
http://www.tax.state.ny.us/pdf/1999/fillin/st/st120_699_fill_in.pdf

Exempt Use Certificate: ST-121
For purchasing “Machinery and equipment, parts, tools, and supplies used or consumed in the production of tangible personal property for sale”.
PDF Instructions & Form ST-121:
http://www.tax.state.ny.us/pdf/2009/fillin/st/st121_1009_fill_in.pdf

Certificate of Exemption for Purchases of Promotional Materials: ST-121.2
For promotional materials that are delivered by mail to customers or prospective customers, for which there is no charge to them.
PDF Instructions & Form ST-121.2:
http://www.tax.state.ny.us/pdf/2008/fillin/st/st121_2_1108_fill_in.pdf

More on NYS sales tax laws here:

New York Sales Tax–part 1
http://www.gotogreatpanes.com/blog/2008/01/17/new-york-sales-tax

New York Sales Tax–part 2
http://www.gotogreatpanes.com/blog/2008/02/24/new-york-sales-tax-continued

More NY State sales tax forms here:
http://www.tax.state.ny.us/forms/sales_cur_forms.htm

NYS Dept. of Revenue Forms and Publications Page:
http://www.tax.state.ny.us/forms/default.htm

5. Employer Identification Number:

Your business may not be required to get a:

Taxpayer Identification Number (also referred to as TIN),
Employer Identification Number, EIN, or
Federal Taxpayer Identification Number, FTIN.

These all refer to the same thing, I don’t know why it goes by so many names!

You’ll need to check the IRS website to see if you should get one–there’s a link in our “The IRS Website–Links for Businesses” post. While we didn’t need to get one, we chose to, see that post for details.

If you have an EIN and you register with NY to collect sales tax, your NY Sales Tax ID Number will be the same as your EIN. Just having an EIN does **NOT** mean you are allowed to collect NY sales tax, you must apply for a “Certificate of Authority to Collect Sales Tax” before you are permitted by the state to collect sales tax. (Links to apply for your NYS Certificate of Authority, EIN and other business info will be posted shortly.)

6. Certificate of Authority:

Having a NY Tax ID means you have a NY State “Certificate of Authority” to collect NY sales tax. (Links to apply for your NYS Certificate of Authority, EIN and other business info will be posted shortly.)

7. Collect Sales Tax from Customers, then Remit it to the State

Once you have your NYCertificate of Authority, you collect sales tax from your customers who have packages shipped to New York addresses, and report and pay the sales tax you collect to NYS.

The New York State Department of Taxation & Finance sends you the paperwork once you have been approved to collect sales tax with instructions for collecting from your customers and remitting the money you collect to NYS.

For us, the first year we were required to file quarterly. After the first year, the state assessed our business to be small enough that now we only file once a year. Sales tax is completely separate from your annual state and federal income taxes.

I’ve written up some info that I’ve shared across several lists/threads over time. This information doesn’t cover all areas of sales tax and when/how to apply it. This is based on my knowledge of NY State business info, and I advise you to re-check the info with NYS publications and employees yourself.

Please-please-please–Always double check info you get on-line with the authority in charge of dealing with it in real life.

Each state has its own regulations–posts for other states with limited info coming soon!

Helpful NYS document with the basics for NY Sales Tax–it’s a PDF file:

More NYS documents: Sales Tax Publications

Some New York Sales Tax info:

1. You can’t use Paypal’s sales tax calculator for NY Sales Tax:

NY has more than 10 different tax rates across the state based on county that can only be determined by using the buyer’s street address AND zipcode, which means you can’t set up Paypal to accurately charge NY sales tax.

Even if you put all the 5 digit zipcodes in the sales tax function on Paypal, it will not charge sales tax appropriately for NYers because the sales tax rates are determined by political zones which are not defined by 5 digit zipcodes since 5 digit zipcodes can cross county lines. (You could put in the 9 digit zipcodes, but I can’t imagine how long that would take since they change with every building.)

You can have two houses next to eachother in the same zipcode and each has a different sales tax rate because they fall under different political jurisdictions.

To find the tax for a specific New York address use this on-line form:

http://www8.nystax.gov/STLR/stlrHome

Don’t forget to make sure your items fall under the general sales tax rate by checking the blue “Limitations on Use” link on that page. Clothing, food items and other products may not get the same rate as everything else gets at a particular location.

Limitations on Use: http://www.tax.state.ny.us/e-services/stlr/stlrinfo.htm

2. In-Person Sales–Use the Local Sales Tax Rate:

For in-person sales, you must charge the state and local tax for the location of the sale–for example, when you are at a show you charge the rate based on the street address of the show.

In-person rate is based on the location where the item is sold.

3. Shipping Items You Sell–NY Uses Destination-based Sales Tax:

If you sell through the internet, by mail or by phone, the location is the address to which the item is shipped regardless of the location of the buyer or seller.

This means that collecting the tax based on YOUR location is not correct unless you happen to live in a zone with the same tax rate as the delivery address.

If the buyer lives outside NY, but is having the item shipped to NY, you still must charge sales tax based on where the item is being shipped.

See this FAQ page from the NYS website:

NYS website: Sales tax based on “point of delivery”.

4. There is Sales Tax on Shipping:

NY sales tax is also applied to shipping charges, unless you have a third party ship your items, in which case they charge you tax on their service. For example, a pack and ship store will charge you sales tax on their services, and you pass that cost on to your buyer in the total cost; you don’t re-tax that amount since sales tax has already been paid on it.

Continued here New York Sales Tax–continued

Go To Great Panes, Kathryn Maloney ©2010
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