How to Charge and Remit Retail Sales Tax?
November 2, 2020
Owning and operating a business requires more than just making sales and collecting the payments. The other considerations include the charging and remitting the state sales tax. Both of them depend on your sales tax filing. If you are collecting sales tax from your customers then that amount will be paid to the state.
Sales tax is usually charged on the most retail goods and some services. Though there are exceptions to sales tax as well such as groceries and pharmaceuticals. Generally, if you are making some kind of retail transaction, either online or manual, to the customer in your state, then it is required for you to charge the sales tax.
Some of the states in the United States require for an online retailer or online business to collect sales tax if the business is located in some other state but it has an affiliation in the state where the sales is being made.
Charge Retail Sales Tax:
- Apply for a resale license or a seller’s permit with the Department of Revenue (DOR) or the tax agency. This permit is important as it gives you a state resale number and allows you to collect tax on retail sales.
- You can either call or visit the website of the Department of Revenue of your state for you to obtain the sales tax rate where your store or business is located.
- First research and learn about the taxable and non-taxable goods and services in your state. The Department of Revenue (DOR) might have their guidelines about it for your state.
- You need to add the sales tax to all the customer purchases from your business or store. When you make a sale then your computer system will automatically add the proper tax amount to the original amount. For example, if the taxable products cost you $100 and the sales tax is around 7%, then multiply 100 .07, which then equals $7 of sales tax. So, the total payable amount will be $107.
- Keep track of your sales tax which you are collecting. If you have a cash register or computer bookkeeping system then they will do the work for you automatically.
Remit Retail Sales Tax:
- Contact the Department of Revenue (DOR) or the tax agency to find out how often you need to remit the sales tax which is collected, it is known as the filing period. This is where you can file for tax return or sales tax filing. Most of the states in the US require you to pay monthly, quarterly or annually for it.
- Calculate the amount of the sales tax which you have collected during the filing period. The states in US, they give you a grace period (3 or 4 weeks), before your payment is due.
- Use the sales tax remittance form to complete and sent it with your payment. If you mail the sales tax amount which is due then there will be enough time for the delivery to the department of revenue office. For late payments, you will be assessed a fine or will be charged interest.
- You can even apply for it online if the state offers you this kind of option. You can schedule the payment due on the DOR’s website before or on the due date.