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Sales Tax & Business Registration

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Go To Great Panes, Kathryn Maloney ©2011
(This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.)

Selling On-line? You might need to:

  • Register with your state to collect sales tax,
  • Register your business with your state and/or local authorities,
  • Get a business license or business permit,
  • Report the money you make on your income taxes, no matter how little it is…

Even if you only sell online, make no profit, consider selling only a hobby, or don’t sell items often, the government may want you to register with them.

Once folks learn that there are some legal issues with selling, they often don’t know where to start. Hopefully this page will help you get started on the right foot. It’s not meant to replace getting help from a professional and you should double check info you get online with the state & local authorities.

Sales tax and business laws vary widely from state to state and often from city to city/county to county. Your best bet it to contact state & local officials to find out what is required for your type of business in your location. Links below take you to official government pages, but first some introductory info…

Please, please, please don’t take the word of people in forums or on non-official websites for what your legal responsibilities are. That includes this blog. Always check info you get with the authorities in charge of setting the rules.

The Basics

Sales Tax:
Most states require you to register before you start selling. There are a few states with no sales tax, some that allow some sales before your need register, some that allow you to collect & remit sales tax without registering and some that require you to register before you start to sell and you won’t know which yours is until you check your state’s laws. (Often states offer an amnesty program/voluntary disclosure or compliance program for folks just learning that they should have been collecting taxes, so be sure to ask about that if it suits your situation. Click here for a page also lists current/upcoming amnesties–though I don’t know if it is kept up to date well.)

Registering to collect sales tax:
Sometimes it’s free, sometimes there’s a fee. The paperwork is not difficult, don’t bother paying some “business registration” or “legal help” website to file it for you.


Before you register… Be aware that if you give a phone number while registering for sales tax, the state may make that number public as a business number and you might end up getting phone calls from solicitors.* See here for
how to avoid using your home number during registration.


You might need an NAICS code for your business–this is just a code that describes what type of business you have. These sites should help you find the right one: http://www.census.gov/eos/www/naics and http://www.naics.com/search.htm

The types of things you might look up when figuring which code is right for you: retail sales, internet sales only, used goods/second hand dealers, antiques, artist (fine, graphic, photographer…)

What you need to know about your state’s sales tax:
Sales tax laws are different in every state but the questions folks have are always the same. Answering the questions on this list with info you get from your state will give you a good understanding of the issues involved before they even come up: gotogreatpanes.com/blog/2008/06/26/sales-tax-questions

Occasional Sales:
If you set up a shop online, like an Etsy shop, you generally don’t qualify as an “occasional seller”. Many states will consider this a business venture and require you to register at the very least to collect sales tax, sometimes there’s other registration required too. Please check if your state considers how you sell to meet their “Occasional Sales” exemption from registration & tax collection. In many states more than 3 days worth of a yard sale per year will even take you out of the occasional seller group and make registration a requirement.

Hobby / Individual Seller:
Non-business sellers, in most states, are required to register & collect sales tax if they set up to sell to the public. Even if you think you qualify as a hobbyist or “individual” seller and not a business, the law may be that you still need to at least register for sales tax and the authorities may feel differently about you meeting other registration too, so please check your state & local (county/parish, city…) registration requirements.

See here for how the IRS differentiates a business from a hobby:
Is Your Hobby a For-Profit Endeavor?

Business Type:
Picking a business type depends on what you sell. Many small businesses are Sole Proprietorships, the most simple business structure.

If you sell items for children, food or bath & body products it might be better to incorporate to protect your personal assets. Basic info about business structure from the IRS: Choosing a Business Structure.

If you go with a Sole Proprietorship, you will file your business income with your personal income taxes on the Schedule C each April. See here for help–preparing your records as you go will save big headaches come spring: Filing Income Taxes for Your Small Business

Doing Business As (DBA), also known as a Fictitious Name:
If you are doing business under a name other than your given name (“Soap is Dope”, for example, as opposed to “Mary Smith”) most areas will require you to register the DBA name.

Some places have a small fee to register a DBA & a page or so of paperwork that basically has a person’s name, address and the business name on it. Other locations require that plus posting it in the newspaper for a set amount of time. (If you need to do the newspaper thing, I’ve heard small weekly papers work and cost less than putting the legal notice in a daily paper.) Again, you don’t need to pay for some business registration service if you are filling out one of these forms.

More personalized help:
If you need more help after reading the links above & below that apply to you, you might want to consider setting up an appointment with a business counselor. The US Small Business Association (SBA) is government run and offers free help: SBA


Links to specific state pages will open in a new window

Business & Sales Tax Registration Links
State names in blue text are links to info for that state.
Some have just basic info to get you started, some have a lot of links to details. I’ll add links for more states & more info for already linked states as I have the information.

Alabama Kentucky North Dakota
Alaska Louisiana Ohio
Arizona Maine Oklahoma
Arkansas Maryland Oregon
California Massachusetts Pennsylvania
Colorado Michigan Rhode Island
Connecticut Minnesota South Carolina
Delaware Mississippi South Dakota
District of Columbia Missouri Tennessee
Florida Montana Texas
Georgia Nebraska Utah
Hawaii Nevada Vermont
Idaho New Hampshire Virginia
Illinois New Jersey Washington
Indiana New Mexico West Virginia
Iowa New York Wisconsin
Kansas North Carolina Wyoming

Visit our Etsy shop: GoTo


Alabama
Starting a Buisness
Sales & Use Tax
“All persons or businesses that sell tangible personal property at retail or operate places of entertainment or amusement must collect the tax…”
Source: Starting A New Business pamphlet
More Brochures & Pamphlets

Alaska
Starting a Small Business (PDF file)
Small Business Assistance Center
DOR–Tax Division
Arizona
Transaction Privilege Tax (TPT)/Licensing: AZ has Transaction Privilege Tax, not sales tax.
Publications page–see:
~~~Seller owes if whether or not they collect if from buyer: see Publication 602, p1
~~~Casual Sales: You need to collect… “even if you consider your sales a part of a hobby.”: see Publication 602, p1 #3
~~~Tax on Shipping: see Publication 602, p1 #8
AZ: Business
Forms–including:
~~~TPT-1 Transaction Privilege, Use & Severance Tax Return
~~~TPT-1 Instructions
~~~TPT-Deduction Codes (details)
AZ Dept of Commerce: Small Business Services
Out of state sales are exempt–: “Retail sales of tangible personal property to nonresidents temporarily within Arizona, for use outside of Arizona, are exempt from transaction privilege tax…”
From: A Guide to Taxes for Arizona Businesses – Business Basics
Arkansas
Who must register? “Vendors located and operating in Arkansas must register under the Gross Receipts Tax Law if the vendor sells property or services subject to sales tax…” See the start of this official state PDF: Starting a New Business?
Arkansas local sales tax is based on delivery location
State Sales Tax Main Page
Local Sales Tax Page
Raffle Info (and Charitable Bingo) PDF file
Who needs a permit to sell food?
California
Starting a Business
Business Resources
Sales & Use Tax – Regulations
Who must obtain a seller’s permit?
Sales & Use Tax Publications–see #100 for tax on shipping info
Sales & Use Tax Forms & Applications (including instructions)
Register for a Permit or License
Applying Tax to Your Sales & Purchases–info on tax rates, when to collect, what to do when you collect the wrong amount, shipping & handling charges, barters/trades….
Secretary of State’s Business Entities Page
Basic CA Sales Tax Return Instructions PDF file (from the state)
An Etsy forum thread with great links: etsy.com/forums_thread.php?thread_id=6249138
LA County Fictitious Business Names
Colorado
Start a Business
Sales Tax FYI Publications Page–see:
Sales 8: Sales Tax Requirements for Small Home Businesses–you must collect even if you don’t have to register
Sales 9: Sales Tax Licenses and Filing Requirements
Before you decide that you don’t need to register, please call the state to see if how you sell (like setting up your Etsy shop) qualifies you as an occasional seller or if CO sees what you do as a business that requires registration. (“The sales tax license exemption outlined above does not apply to you if…”)
Sales 29: Tax on Shipping? Read pub 29
Rate for mailed items–see Sales 62 under “Deliveries of Goods”
Sales 79: Sales of Taxable Items Over the Internet–currently being re-written according to the state website (01/12), but this might help a bit in the mean time: Business Licensing Database for mail order/online sales
Common Filing Errors on Sales Tax Returns–tips from the state
Tax Classes–learn how to handle sales tax from the state
Bingo & Raffle–do it by the state’s rules
Connecticut
Starting a Business Checklist
Starting a New Business
Who need to register to collect sales tax
Registration Options
One rate for the whole state
Shipping & tax
State Tax Guides
Business FAQ
Delaware
District of Columbia
Start a Busines
Start a Busines Checklist
Business Homepage
Forms & Publications
Sales Tax Publications
Tax Rates & Revenues
Sales Tax Rules

Florida
Starting a Business in Florida
What taxes are required?
FL discretionary sales tax info:
Destination-based salest tax
“The full amount of sales tax must be collected at the time of the transaction. Sales tax, including any county surtax, must be separately stated on the sales slip, charge ticket, invoice, or other evidence of sale.”
Source: Publication GT-300015: Guide for Business Owners (page down for a link to this publication)
Florida Department of Revenue
Georgia
First Stop Business Information Center
Business, Labor & Employment–resources you need to start a business
Every person making a retail sale should collect & remit the applicable tax on all non-exempt sales. (PDF file–see page 12)
Department of Revenue
General Sales Tax Info: Destination-based sales tax–”The tax rate is based on the county where delivery takes place.”
Sales Tax Forms
Dept of Revenue Publications
Business Taxes Info including sales tax
Hawaii
Starting a Business–PDF file
HI Government Starting a Business Page
Regsiter with the Dept of Taxation
Tax Facts page: info on HI’s General Excise/Use Tax (GET).
General Excise vs. Sales Tax PDF file–how sales tax & GET are different.
GET FAQs page
Idaho
Idaho Business Resources
Sales Tax–main page
Sales Tax Publications
Do I need to register? If so, when? That’s covered in this PDF document: #4 Retailers–An Educational Guide to Sales Tax in the State of Idaho
Shipping & handling is only taxable on taxable goods when it is not stated separately–see page 7 of #4 Retailers (above)
Illinois
Starting a Business
Step by Step Guide to Starting a Business
Do I need to register with the IL Dept of Revenue?
IL Dept of Revenue
IL Dept of Revenue FAQs
Publication 113: Retailer’s Overview of Sales and Use Tax
Internet sales are taxable except when shipped out of state
Shipping and handling taxable?
Sales & Use Tax Forms
City of Chicago: Operating a Business Out of Your Home
Know what your business owes use tax on: Illinois Use Tax Fact Sheet–pdf file.
Indiana
An Entrepreneur’s Guide to Starting A Business in Indiana
Busines FAQStart a Business, Tax Form info…
Sales Tax FAQ
Business Structures
Register a New Business
Must regsiter if (this is a PDF file): “A person is an Indiana Retail Merchant and must be registered with the Department to collect Indiana Use Tax if the retail merchant is engaged in selling at retail for use, storage, or consumption in Indiana.” (see more info below)
Information for Businesses
Retail Sales Tax & Use Tax PDF file, AKA “Brochure #3″, gives you the basics including that items shipped out-of-state are not subject to IN sales tax.
Selling Food
DOR–Sales Tax Forms & Publications
Sales Tax Information Bulletins–there are many, be sure to check out at least these in the table for Sales Tax (not the income tax bulletins):
# 20: See the last page for a definition of non-auction casual sales
# 34: Sales Tax Application to Photography
# 40: Prizes & Other Free Merchandise (Blog give-aways anyone?)
Chapter 7-Registration for Tax ID: “You will need to register your business with the Department if you: Will be selling products or tangible items (sales tax)…”
“Selling at retail” defined in IC 6-2.5-4-1 as “Sec. 1. (a) A person is a retail merchant making a retail transaction when he engages in selling at retail.”
Registered retail merchant’s certificate IC 6-2.5-8-1 Version a:…
Sec. 1. (a) A retail merchant may not make a retail transaction in Indiana, unless the retail merchant has applied for a registered retail merchant’s certificate…”
Tax Forms–includes a link to sales tax forms
Iowa
Starting a Business
Sales tax FAQs
Forms & Publications
Kansas
Thinking About Starting a Business
Starting a Business: Developing, planning & licensing
Sales Tax
Looks like destination based sales tax
Sales Tax & Compensating Use Tax (PDF)–pages 17 & 18 for tax on shipping info
Sales & Use Tax: Rate Locator
Sales Tax Forms & Publications
Kentucky
One-Stop Business Licensing Program
or see the Professional Licensing & Permits–page down to the “Business Permits and Licensing Requirements” link in the left column of links
Business Center
Sales & Use Tax
KY FAQ Sales and Use Tax–PDF file
Delivery Charges–taxable
More KY “Sales Tax Facts” editions: http://www.revenue.ky.gov/newsroom/publications.htm#S
Louisiana
Register a Business
Online Business Registration
Who must file
Main Business page
Forms & fee schedule
Geauxbiz: mail in this form and the state will send you a customized list of requirements for your business
Sales Tax Statutes and Regulations
Sales tax FAQ
Maine
Maryland
Who needs to register? “If you will make sales in Maryland, you will need to obtain a sales and use tax license…”
Maryland Checklist for New Businesses
Starting a New Business in Maryland
Tax Included?
Sales Tax FAQ
Purchases for Resale–not all are tax free when you buy in-person, but you can report tax overpaid when you remit your sales & use tax return.
Want to read the laws straight out? Try:
Subtitle 06 of the SALES AND USE TAX Page
Massachusetts
Getting Started
Who Should Register?
A Guide to Sales and Use Tax
Sales/Use Tax Forms & Exempt Certificates
Sales and Use Tax–Overview
Sales and Use Tax–Documents
DOR Small Business Workshops
City of Worcester Business Guide
The Laws (boring tax code, but the info is in there):
PART I: Administration of the Government
TITLE IX: Taxation
CHAPTER 64H: Tax on Retail Sales of Certain Tangible Personal Property
Michigan
Business Center: Starting your business
Guide to Starting a Small BusinessPDF
One sales tax rate for the whole state
Sales and Use Tax FAQs
Shipping & sales tax
Sales & Use Tax Certificate of Exemption
Voluntary Disclosure
Selling food: In-home bakery
Raffle Guide
Use Tax
Minnesota
Should I be collecting sales tax?
Who needs to register? How frequently will I file & when? See the MN Sales & Use Tax Instruction Book–PDF file
Register for a tax ID number
Sales and Use Tax
Sales tax fact sheets
Mississippi
Missouri
Missouri Business Portal
Sales & Use Tax Main Page–includes some FAQ links, tax rate links, etc
More FAQ links here for sales & business taxes
Shipping & sales tax
Montana
How to Launch a New Business
Main MT Business Page
MT Dept of Revenue Business Page
Sales Tax FAQ
Made in Montana–who qualifies
Nebraska
Sales Tax FAQ
New Business Information–including DBA
Forms
Nebraska One-Stop Business Registration
Starting a business in Nebraska–Who needs to register? You do, if you are selling on Etsy or have another web-based venue.
Sales & Use Tax–the main page including a link to register & a link for filing your Nebraska sales tax online. See the links on the left side of this page for forms & information guides.
Business Tax FAQ
Delivery charges taxable? See the “Delivery Charges” PDF file here
Want to read the dry old sales tax regs? Title 316 – NEBRASKA DEPARTMENT OF REVENUE Chapter 1 – SALES AND USE TAX
Nevada
Start a Business
Main Business Page
NV Dept of Tax FAQs says:
~~~Shipping is not taxable, but handling is
~~~Sales tax included is ok, but you shouldn’t be charging tax to out of state buyers so if you are selling online tax included probably isn’t the way to go unless you want to do a lot of refunding.
Tax Forms
Tax Publications & specifically ones for Sales Tax
Main Dept of Taxation page
New Hampshire
New Jersey
Who Must Collect Sales Tax? Shipping taxable? See this PDF file:
Making Mail-Order & Internet Sales
Starting A Business
NJ Business Registration Page
Printable Forms–Sometimes it’s just nice to see it on paper before you fill it out online, or to be able to read the instructions before filling something out.
Arts & Crafts Businesses Pub ANJ–11 (PDF)
Sales & Use Tax: Forms, publications & FAQ
Sales Tax FAQs
Getting Registered
Tax Center
New Mexico
Small Business Services: Starting Your Business
New & Small Business Education Center
NM has a “gross receipts tax” instead of sales tax which is based on the seller’s location.
Some states with this type of tax have an exemption for items shipped out of state but I couldn’t find info on the website so I recommend calling the state to check if that’s the case. The closest I saw was the third faq link in the right sidebar of this page, but it didn’t mention goods shipped out of state.
Who should register? (& how to)
Tax workshops provided by the state
NM Tax Forms & Publications
How NM defines a business nexus.
Gross Receipts Tax Credits
See the “What is a DBA & do I need one?” link on the FAQ page if you are selling under a name other than your given name.
New York
Because I’m from NY, I’ve got the most info on NY so I have organized it here:
NY Sales Tax & Business Registration Requirements
North Carolina
Start Your Business in North Carolina–Start a business check list, licenses…
Who should register for sales tax
Required to collect & remit sales tax
Sales & Use Tax
Starting a home-based food business
Dept of Revenue–Information for BusinessesTax info, forms…
Destination-based sales tax: A retailer who ships or delivers…

North Dakota
When is a (sales tax) permit required & how do I get it?
Sales & Use Taxes FAQ
Is shipping taxable?
More details: Guideline: Sales, Use and Gross Receipts Tax Requirements (PDF file)
Business Registration Web Site
Ohio
Who needs to register? Ohio law requires any person or business…
Sales Tax Electronic Filing–now required, includes dates
1st Stop Business Connection
Vendors: Sales Tax Laws in Ohio PDF
Sales & Use Tax
Origin-based Sales Tax and also here
Ohio Business Gateway
Business Filings: Name Availability Guide & Search–see links on left
Sales Tax FAQs–near bottom of page
Tax on shipping? and also explained here in detail

Oklahoma
Do I really need a sales tax permit? See here and here
Business Registration Packet–good overall info
Register to collect sales tax online
Starting a Business
Destination-based rates when item is shipped
Sales Tax FAQs
Main Sales Tax page
Forms & Publications
Business Taxes–including Business Tax Workshops, Business Structures, How to Form a Business…
The legal code: CHAPTER 65. SALES AND USE TAX PDF–dry but detailed. See:
710:65-15-1. Sales related to interstate commerce, b(2)–items shipped out of state aren’t taxable
710:65-1-5. Unlawful to advertise that sales tax will be absorbed
710:65-1-6. “Tax-included” prices
PART 7. “D”–Shipping/Delivery Charges
Oregon
Business Info including the Business Wizard to tell you how to start
Business FAQ
DOR Business Taxes Homepage
Forms & Publicaitons
How to Start a Business in Oregon–PDF
Food Businesses
Small business state tax and government agency contactsPDF
Portland

Pennsylvania
Starting a Business in Pennsylvania-A Beginner’s Guide
Online Business Start up wizard–see the “Online Business Registration Interview (OBRI)” on this page
Who must register to collect sales tax? See #1a in the Retailers’ Information: State and Local Sales… Tax PDF
Register to collect PA sales tax
FAQ & ask a question center
What is included in the purchase price of an item for Sales Tax?
Shipping & Handling–even when some items are not taxable
Sellers collect state tax if they are not in an area with local tax
Sellers can voluntarily collect local tax too (looks like they are not obligated to if not in a local tax area, please contact state to be sure…) This is also covered in the PDF link above in entry # 16
What’s taxable? See the “Retailers’ Information” PDF link above
Use Tax
Manufacturers exemption from Sales Tax on purchases but check on local zoning before stating that you are a manufacturer, as opposed to an artist-the benefit of no sales tax may not be worth the hassle.
What is a tax exempt number? sale tax license number? exemption certificate?
Fines for not registering
Want to read the actual code? § 60.16. Local Sales, Use and Hotel Occupancy Tax

Rhode Island
South Carolina
South Carolina Business One Stop (SCBOS)
General Sales Tax Info
Sales Tax is Destination Based, rates go by county–see page 46
5 Digit zip codes cross county lines, so you need the full address or 9 digit zip code to calculate sales tax accurately
South Dakota
Tennessee
Instructions for Opening a Business in Tennessee
One Stop Business Resource
Sales & Use Tax–FAQ
Sales & Use Tax
Sales tax on shipping
Registration requirements: If you sell less than $400/month, it depends on where you get supplies…
Sales and Use Tax Forms, Instructions & Exemption Certificates
Texas
Selling on the Internet:
~~Register if you sell 2 taxables items in-state w/in 12 months
Texas Busines Advisor
Start a Business
Quick Start for Business: A guide to Comptroller resources for businesses.
How much is sales tax?
Local Sales Tax Rate Search
Sales tax FAQ–#6–penalty for inaccurate collection, #7–trades taxable, #8 tax on shipping for taxable items….
Food Sellers
Cosmetic Sellers: Texas Department of State Health Services

Utah
Main Sales Tax page
Who Must Collect and Pay Sales Tax… “A person who sells personal property to a final consumer must collect tax on the sale.” page 2 of publication 42–PDF file
“Most businesses must begin by doing the following…” page 1-4 of publication 38–PDF file
Publication 25, General Sales Tax InformationPDF file
Vermont
Virginia
Starting a Business in Virginia
Sales & Use Tax
FAQs for Business: How to Register, When to Register, When are they due… Are shipping charges taxable?
Washington
WA Business registration quiz–helps you figure out what you need to be properly registered with the state.
Get a Business Licensing Guide online–a second quiz for licensing requirements
Online sales–info on registration
When you engage in any activity, including hobbies, for gain, benefit, or advantage (regardless of profit or loss), you are considered a “business”…
Get a Business Licensing Guide online–gives you a list of who to contact for registration in your specific business & location
Starting a Business–more on Business Licensing
Get a form or publication from the Dept of Revenue
Seller must remit sales tax for all in-state transactions, even if they don’t collect it from the buyer.
Destination-based sales tax: You need the 9-digit zip code to accurately calculate it, but the state will allow you to use 5 digit zip codes because 9 digits is difficult for many sellers: Tax rate–Use 5 digit zip codes
Tax on shipping? Click the “Individuals Via Online Auctions or Marketplaces” link here and see the bottom of the page.
West Virginia
Wisconsin
Who needs a Wisconsin seller’s permit?
WI Business Wizard
Sales & Use Taxes main page
WI Sales & Use Tax FAQs including: no tax on items shipped out of state (#4), tax on shipping for taxable goods (#5)…
Sales & Use Taxes Publications
County Sales & Use Tax: rates are destination-based
WI State Business Services
Tax Rates
Want to read the tax code? It’s a little dry… :)

Wyoming

*Buisness phone numbers do not qualify for the Federal Do Not Call Registry so telemarketers do not need to follow the rules about not calling a number you give out as a business phone number.