Sales tax is imposed on all retail sales, leases and rentals of most goods, as well as taxable services. In other words a sales tax is a tax on the end-purchase of a good, so it normally does not apply if a sale is for re-sale or for subsequent processing. Sales tax normally a certain percentage that is added onto the price of a good or service that is purchased.

Your sales tax responsibilities as a new business owner, whether you start a business or buy an existing business, will vary depending on the type of organization or entity you operate. Besides state level, estimation of sales tax is also done on municipal or county levels. Payment of state sales tax depends on your sales and your state's regulations.

Normally it is the consumers who are burdened with sales tax. The re-sellers on the other hand, are exempted from sales tax, provided they do not use the goods on which sales tax is levied.

Display your sales tax registration certificate

You must prominently display your sales tax registration certificate at your place of business. If you have no permanent physical location, you can attach it to your truck, cart, wagon, stand, or other vehicle or facility from which you conduct business.

Why should I get sales tax vendor ID number? (Reseller tax id)

You will need to collect Sales Tax if you are selling a product or offering a service that is taxable. The process of getting a Sales Tax ID is called obtaining a sales tax exemption certificate.

Your state tax id number authorizes you to collect sales tax on your taxable sales. Once you receive your state tax id number, you are considered to be in business even if you never make a sale or never open the doors of your establishment. It is therefore important that you file your sales tax returns on time, even if you did not have any taxable sales during the reporting period, to avoid being subject to penalties for not filing

What should I do if I change my Organizational Structure?

If your business changes its organizational structure (for example, from a sole proprietorship to a corporation, a limited liability company, or a partnership), the new organization must register as a sales vendor and obtain a new reseller certificate for the new business before you begin operating under the new organizational structure. You must also file a final return for your existing business and surrender the sales tax permit or reseller permit that was issued to the previous business.

Impact of sales taxes

Sales taxes can be applied to tangible goods like food (in some states), clothing, cars, furniture, household items, and other goods. By comparison, the sales tax does not generally apply to landscaping services, attorney fees, private school tuition, stocks and bonds, real estate investments, and other purchases more typically made by higher-income families.

A seller has to charge sales tax if it has 'nexus' where it is located. Nexus, or physical presence, is established if a business maintains a temporary or permanent presence of people (employees, service people or independent sales/service agents) or property (inventory, offices, warehouses) in a given locality. There is no over-arching definition of nexus, so each taxing locality may define it differently - and many do, leading to endless problems for businesses which have operations in multiple states.

All the products are subject to sales tax, and states offer different exemptions for this. Food, clothing, pharmaceutical products, purchases for agricultural are commonly excluded. The rates of sales tax may also vary within a state for different types of business.