Sales Tax Permit

How to Register for a Sales Tax Permit

The Steps to Register for a Sales Tax Permit

Step #1: Check Your Eligibility

Generally speaking, you’re required to hold a valid sales tax license in every state for which you have a “nexus,” or connection.

That nexus can be physical, such as a physical office, warehouse location, employees or other tangible connection. But thanks to the Supreme Court’s June 2018 South Dakota vs Wayfair decision, a nexus can also be economic in nature.

Take the state of Michigan. According to its Treasury department, an economic nexus is created when remote sellers sell more than $100,000 or conduct more than 200 transactions in the state.

You might also be off the hook if you’re selling into one of the five US states – Alaska, Delaware, Montana, New Hampshire, and Oregon – that don’t have a state sales tax (though you’ll need to be sure you’re in compliance with any local sales tax obligations in these areas).

Step #2: Find the State’s Registration Forms

Once you’ve determined that, yes, you do have to register for sales tax in a given area, you’ll need to file the appropriate forms with the state or local governing body.

Some states make this easier than others. In Texas, for example, you can complete the sales tax permit application online. In other states, you may still need to file paper forms – even if online registration options exist.

Step #3: Remain in Compliance

Registering for a sales tax permit isn’t enough. In order to remain in compliance, you may need to renew your license. For instance, in Colorado, you’ll need to renew once every two years – and you’ll have to pay a $16 fee each time.

You’ll also have to make sure your sales tax obligations are reported on-time and filed completely. If they aren’t, you may be subject to fines, penalties, and possible revocation of your license.

If you sell in one state, you can probably manage these requirements on your own. But as soon as you start selling into other areas, keeping on top of your various tax obligations can get frustrating. Find out how Quaderno can simplify the process of keeping you compliant.

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* At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or accountant.