Small Business Taxes

Sales and Use Tax

Almost every company must pay sales and use taxes in the United States. When you sell something, you may need to collect and remit sales and use taxes. When you buy something, you may have to pay sales and use tax.

Sales taxes are added to the cost of a product or service and are generally paid by the customer.

Most states and local taxing authorities impose a general sales tax on retail sales and certain services. Business owners are responsible for collecting these taxes and remitting them to the appropriate taxing authority.

Goods purchased to resell from manufacturers or wholesalers are exempt from sales taxes because the tax will be paid by the retail customer. This is commonly referred to as a resale exemption.

Every business that sells taxable goods or services must obtain a sales tax license from the state in which it does business prior to engaging in business.

Use taxes are generally levied on the sales price or rental charge for tangible personal property on which no sales tax has been paid.

This most commonly occurs when the item is purchased from a business in another state and shipped to the user's state (most states do not impose sales taxes on products that are shipped to another state).

For more information on the specific tax obligations for your state, contact the tax oversight agency.

Share this article

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities

Contributors

Business Glossary