What You Need to Know About Sales Tax for Your Business
- Brian R. Schobel, CPA
- 9 minutes ago
- 2 min read
Sales tax is one of those topics many small business owners dread—but understanding the basics can save you from costly mistakes. Even if you collect sales tax every day, it’s important to know when, where, and how you’re responsible for it.
What Is Sales Tax (and Why It Matters)?
Sales tax is a tax collected from customers and then passed on to the state or local government. It’s not your income—but if it’s handled incorrectly, it can become your problem.
Each state has its own rules, which means sales tax obligations can change depending on where you operate or sell.
When Do You Need to Collect Sales Tax?
You generally need to collect sales tax if:
You sell taxable products or services
You have a business presence in a state (such as an office, warehouse, or employees)
You sell online and meet certain sales or transaction thresholds
Not everything is taxable, and rules vary by state—so assumptions can be risky.
Tips to Stay Compliant
Keeping sales tax under control doesn’t have to be complicated:
Register before collecting – Most states require a permit.
Know what you sell – Some services and products are exempt.
Charge the correct rate – Rates can vary by city and county.
Set aside collected tax – Treat it like it’s not your money.
File and pay on time – Late filings can lead to penalties and interest.
Make Sales Tax Easier
Sales tax errors often happen when businesses grow or sell in new states. Using accounting software or working with a professional can help ensure accuracy and peace of mind.
Final Thought:
Sales tax doesn’t have to be overwhelming. Take time to understand your obligations, review your setup regularly, and plan ahead. A little attention now can help you avoid major headaches later—and keep your business running smoothly.
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