Q: Sales & Use Tax Resources

State Resources: Georgia Department of Revenue – Sales & Use Tax South Carolina Department of Revenue – Sales & Use Tax North Carolina Department of Revenue – Sales & Use Tax Tennessee Department of Revenue – Sales & Use Tax Florida Department of Revenue – Sales & Use Tax

Question 1

Do I owe sales and use tax if I don't have a physical location in the state?

Accepted Answer

Yes, even if you don’t have a physical presence in a state, you may still be required to collect and remit sales and use tax due to economic nexus laws. These laws establish tax obligations based on your economic activity within a state, such as total sales revenue or the number of transactions, rather than your physical location. For example, in Georgia, if your business exceeds $100,000 in gross sales or completes 200 or more separate transactions with customers in the state during a calendar year, you are considered to have economic nexus and are required to collect and remit Georgia sales and use tax.

Disclaimer: This answer provides general information and may not reflect the specific rules of your situation. Sales and use tax laws vary by state. Please contact JSH Accounting Services before taking any action to ensure you are in compliance with the appropriate tax regulations.

Question 2

Can I start collecting sales and use tax as soon as I launch my business?

Accepted Answer

No. Before you can legally collect sales and use tax, you must first register with the appropriate state tax authority and obtain a valid sales tax permit. Simply deciding to collect tax is not enough. There are formal steps that must be followed to ensure compliance. For example, in Georgia, businesses must register with the Georgia Department of Revenue to receive a sales and use tax number. This registration must be completed before any tax is collected from customers. Collecting tax without a permit can result in penalties and legal complications.

Disclaimer: This answer provides general information and may not reflect the specific requirements of your business. Please contact JSH Accounting Services before taking any action to ensure proper registration and compliance with your state’s tax laws.

Question 3

Do all states handle sales and use tax the same way?

Accepted Answer

No, sales and use tax rules vary significantly from state to state. Each state has its own tax rates, definitions of what is taxable, exemptions, and filing requirements. Relying on a one size fits all approach can easily result in compliance issues. For instance, in Georgia, digital products may be taxed differently than in other states, and some services are taxable while others are not. What’s exempt in one state may be fully taxable in another.

Disclaimer: This is general information and not a substitute for professional advice. Please contact JSH Accounting Services to discuss your specific business needs and ensure compliance in the states where you operate.

Question 4

Should I charge sales and use tax on everything I sell?

Accepted Answer

Not necessarily. Not all products or services are taxable, and taxability can vary widely by state. Before charging sales and use tax, you need to determine whether each item you sell is considered taxable in the states where you do business. For example, in Georgia, certain services may be nontaxable, while tangible goods generally are. Applying tax without understanding state specific rules could lead to overcharging your customers or worse, under-collecting and facing penalties.