Every state that has a sales tax requires companies doing retail business in their state to collect this sales tax, file periodic sales tax forms, and send in collected sales tax payments. Sales tax rates vary from state to state, and some cities and states have different rates for different categories of retail sales, such as restaurant food or motor vehicle sales. In addition, some states divide their sales tax forms into sections covering different disbursements, such as city or county sales tax, and state sales tax.
Keep track of your gross sales receipts. Program your cash register to calculate sales tax on each transaction. Collect the sales tax from your customers and set it aside.
Fill in the business information on your monthly or quarterly sales tax form, including your business name, address and phone number, and your business tax identification number. Indicate the quarter or tax period that the tax form covers, and check the relevant box if any of your business information has changed since the last time you filed a return.
Enter your gross sales in the space for your particular category, and multiply it by the sales tax rate for your particular industry. Find the section for your particular city or county, enter your gross sales amount again, and multiply it by your local sales tax rate.
Read the instructions to find out whether there are any allowances or deductions for your particular industry. Some states exempt certain types of food sales, or sales of clothing totaling less than a certain amount. Enter the amounts of these deductions in the appropriate boxes and subtract them from your total sales tax amount.
Sign and date your tax return and mail it by the due date, along with your payment, to your state department of revenue.
- State sales tax rates
- Sales tax exemption certificate application
- National Conference of State Legislatures. "Remote Sales Tax Collection." Accessed March 22, 2020.
- Mass.gov. "830 CMR 64H.6.7: Out-of-State Sales and Deliveries." Accessed March 22, 2020.
- California Department of Tax and Fee Administration. "Sales & Use Tax in California." Accessed March 22, 2020.
- California Department of Tax and Fee Administration. "Regulation 1620. Interstate and Foreign Commerce." Accessed March 22, 2020.
- Washington State Department of Revenue. "Destination-Based Sales Tax." Accessed March 22, 2020.
- Michigan Department of Treasury. "FAQs for Sales and Use Tax." Accessed March 22, 2020.
- IRS. "Publication 334 (2019), Tax Guide for Small Business (For Individuals Who Use Schedule C): For Use in Preparing 2019 Returns," Page 25. Accessed March 22, 2020.
- Illinois Revenue. "Collections Process." Accessed March 22, 2020.
Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.