By Indiana law, any business selling goods to the public must charge sales tax and remit the amount collected to the state. As of 2015, Indiana levies a 7 percent sales tax on non-exempt items. It also charges a 7 percent use tax on goods purchased from out of state, including over the Internet, but for which no sales tax was charged by the seller. Business owners should get familiar with the needed forms and registrations, as well as the list of exempt items.
New Business Registration
A new business owner in Indiana must complete a Business Tax Application and indicate the correct tax type. Indiana requires registration for state sales tax and additional registrations, if relevant, for county innkeeper's tax, food and beverage tax, and motor vehicle rental excise tax. Once the state Department of Revenue processes the application, it will issue a Registered Retail Merchant Certificate, which is renewable every two years.
Items exempt from Indiana sales tax include most grocery items, with several exceptions, including candy, chewing gum, pet food, paper products and marshmallows. In general, any food that is cooked or otherwise prepared before it is sold is subject to sales tax. For this reason, raw peanuts are exempt but honey-roasted peanuts are not. In addition, alcohol is subject to sales tax, as are soft drinks, tobacco, vitamins and toothpaste. Indiana also taxes deli items that are heated and carried out of the place of purchase.
Certain buyers are exempt from sales tax in Indiana. This includes tax-exempt organizations, and anyone buying goods for resale or for manufacturing purposes. In addition, goods shipped out of the state are exempt. Buyers claiming an exemption must present an exemption-certificate, Form ST-105. Without a certificate, the buyer is required to pay the sales tax and apply for a refund.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.