In the United States, sales tax is charged on the final purchase price of a product. The rate varies by state and locality. The sales tax rate in California is 8%. Sales tax can be confusing! In this article, Lori Thelen answers five of the most common sales tax questions lori thelen ca .
The 5 Biggest Sales Tax Questions Answered By Lori Thelen, CPA
In the United States, sales tax is charged on the final purchase price of a product. The rate varies by state and locality. The sales tax rate in California is 8%. Sales tax can be confusing! In this article, Lori Thelen answers five of the most common sales tax questions.
The five biggest sales tax questions answered by Lori Thelen, CPA
When it comes to sales tax, there are a lot of questions that business owners have. We sat down with Lori Thelen, CPA to get answers to the most common questions about sales tax. Here are the five biggest sales tax questions answered by Lori Thelen, CPA:
Sales tax is a consumption tax levied on the sale of goods and services. In the United States, sales tax is imposed at the state level, with each state having its own laws and rates.
In general, any business that sells taxable goods or services in a state where they have nexus (a physical presence), must collect and remit sales tax to that state. However, there are some exceptions, such as for certain types of businesses or transactions.
Most states impose sales tax on tangible personal property (TPP), which includes items like furniture, clothing, and electronics. However, there are some states that also impose sales tax on services, such as repairs or labor charges.
What is a resale certificate and when should I use one?
A resale certificate is a permit that allows a business to purchase items for resale without paying sales tax. Businesses must apply for a resale certificate from their state’s tax authority. In order to use a resale certificate, businesses must keep records of their purchases and sales.
When making a purchase, the business will give the seller their resale certificate instead of paying sales tax. The seller will then not charge the business sales tax on the transaction. The business is responsible for paying any use tax owed on the item when they resell it.
Businesses should only use resale certificates when they are purchasing items that they will be reselling. They should not use resale certificates to purchase items for personal use or for inventory that will not be resold. Doing so could result in penalties and interest owed to the state.
Do I need to charge sales tax on shipping?
Sales tax is imposed on the sale of goods and services in the United States. The tax is typically calculated as a percentage of the sale price and collected at the time of purchase. In most states, sales tax is charged on the total purchase price, including shipping and handling charges.
There are a few states that exempt shipping charges from sales tax, but this is rare. If you are selling products online, it is important to research the rules in your state to make sure you are charging the correct amount of sales tax.
Lori Thelen is a certified public accountant and owner of Thelen & Associates, LLC. She has more than 15 years of experience working with businesses of all sizes on a variety of accounting and taxation issues.
When does the state start collecting taxes from online retailers?
The state of Minnesota generally requires out-of-state retailers to collect sales tax on taxable sales of goods and services delivered into Minnesota if the retailer meets one of the following thresholds:
\n1. The retailer has more than $10,000 in annual sales of taxable goods and services delivered into Minnesota; or
\n2. The retailer makes at least 200 separate sales of taxable goods and services delivered into Minnesota.
\n
\nThere are a few exceptions to this general rule. For example, out-of-state retailers that sell only digital goods are not required to collect sales tax, regardless of how much they sell.
How do I know if I am required to register with California’s Board of Equalization?
If you are an out-of-state retailer selling taxable goods or services in California, you are required to register with the Board of Equalization (BOE) and pay taxes on your sales. If you have nexus in California (meaning you have a physical presence in the state, such as a store, office, warehouse, or other location), you must register with the BOE and collect and pay California sales tax.
If you are an online retailer selling taxable goods or services into California, you are also required to register with the BOE and collect and pay California sales tax, unless you qualify for one of the many small seller exemptions. Even if you don’t have nexus in California, if your annual sales into the state exceed $500,000, you must register with the BOE and collect and pay California sales tax.
If you ship taxable goods into California from another state and don’t charge sales tax to your customers, you may still be required to remit use tax directly to the BOE. Use tax is basically the same as sales tax, but it’s paid by the consumer rather than the seller.
What if my local government collects a business tax?
If your business is based in a city or county that collects a business tax, you are generally required to pay that tax. The amount of the tax can vary depending on the type of business and its location. For example, businesses that sell merchandise may be taxed at a higher rate than service-based businesses.
Some local governments require businesses to obtain a business license before they can operate. The fee for the license is usually based on the type of business and its gross receipts. In some cases, the local government may also charge an annual renewal fee for the license.
If your business is subject to a local business tax, you should contact your local tax office to find out more about the specific requirements for your business.
.
The five biggest sales tax questions answered by Lori Thelen, CPA
When it comes to sales tax, there are a lot of questions that business owners have. We sat down with Lori Thelen, CPA to get answers to the most common questions about sales tax. Here are the five biggest sales tax questions answered by Lori Thelen, CPA:
Sales tax is a consumption tax levied on the sale of goods and services. In the United States, sales tax is imposed at the state level, with each state having its own laws and rates.
In general, any business that sells taxable goods or services in a state where they have nexus (a physical presence), must collect and remit sales tax to that state. However, there are some exceptions, such as for certain types of businesses or transactions.
Most states impose sales tax on tangible personal property (TPP), which includes items like furniture, clothing, and electronics. However, there are some states that also impose sales tax on services, such as repairs or labor charges.
What is a resale certificate and when should I use one?
A resale certificate is a permit that allows a business to purchase items for resale without paying sales tax. Businesses must apply for a resale certificate from their state’s tax authority. In order to use a resale certificate, businesses must keep records of their purchases and sales.
When making a purchase, the business will give the seller their resale certificate instead of paying sales tax. The seller will then not charge the business sales tax on the transaction. The business is responsible for paying any use tax owed on the item when they resell it.
Businesses should only use resale certificates when they are purchasing items that they will be reselling. They should not use resale certificates to purchase items for personal use or for inventory that will not be resold. Doing so could result in penalties and interest owed to the state.
Do I need to charge sales tax on shipping?
Sales tax is imposed on the sale of goods and services in the United States. The tax is typically calculated as a percentage of the sale price and collected at the time of purchase. In most states, sales tax is charged on the total purchase price, including shipping and handling charges.
There are a few states that exempt shipping charges from sales tax, but this is rare. If you are selling products online, it is important to research the rules in your state to make sure you are charging the correct amount of sales tax.
Lori Thelen is a certified public accountant and owner of Thelen & Associates, LLC. She has more than 15 years of experience working with businesses of all sizes on a variety of accounting and taxation issues.
When does the state start collecting taxes from online retailers?
The state of Minnesota generally requires out-of-state retailers to collect sales tax on taxable sales of goods and services delivered into Minnesota if the retailer meets one of the following thresholds:
\n1. The retailer has more than $10,000 in annual sales of taxable goods and services delivered into Minnesota; or
\n2. The retailer makes at least 200 separate sales of taxable goods and services delivered into Minnesota.
\n
\nThere are a few exceptions to this general rule. For example, out-of-state retailers that sell only digital goods are not required to collect sales tax, regardless of how much they sell.
How do I know if I am required to register with California’s Board of Equalization?
If you are an out-of-state retailer selling taxable goods or services in California, you are required to register with the Board of Equalization (BOE) and pay taxes on your sales. If you have nexus in California (meaning you have a physical presence in the state, such as a store, office, warehouse, or other location), you must register with the BOE and collect and pay California sales tax.
If you are an online retailer selling taxable goods or services into California, you are also required to register with the BOE and collect and pay California sales tax, unless you qualify for one of the many small seller exemptions. Even if you don’t have nexus in California, if your annual sales into the state exceed $500,000, you must register with the BOE and collect and pay California sales tax.
If you ship taxable goods into California from another state and don’t charge sales tax to your customers, you may still be required to remit use tax directly to the BOE. Use tax is basically the same as sales tax, but it’s paid by the consumer rather than the seller.
What if my local government collects a business tax?
If your business is based in a city or county that collects a business tax, you are generally required to pay that tax. The amount of the tax can vary depending on the type of business and its location. For example, businesses that sell merchandise may be taxed at a higher rate than service-based businesses.
Some local governments require businesses to obtain a business license before they can operate. The fee for the license is usually based on the type of business and its gross receipts. In some cases, the local government may also charge an annual renewal fee for the license.
If your business is subject to a local business tax, you should contact your local tax office to find out more about the specific requirements for your business.
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