What is sales tax?
What is sales tax, and is your business responsible for collecting it?
Sales tax is a tax on sold products and services that is owed to your state and local government. Sales taxes are enacted when the product or service is actually sold, such as when the customer checks out at the register. Although the customer pays the sales tax, the business selling the goods or services must report the tax to the Internal Revenue Service. Here’s how it works:
1. Customer is ready to check out
2. You charge them the sales price for the product + the sales tax (they are itemized separately)
3. The customer pays the sales tax
4. You collect the sales tax
5. You report the sales tax to the IRS
Because sales tax varies by municipality, the amount you owe can change depending on where you are doing business. If your business is registered in Florida, you must report the sales tax to the Florida Department of Revenue (basically, Florida’s IRS). If you live in Hillsborough County, you will be required to collect the Florida state sales tax of 6% plus the county tax of 1.5%, bringing it to a total of 7.5% sales tax.
Once you register to pay sales tax, you will be put on a monthly, semi-monthly, quarterly, semi-annual, or annual schedule for filing your sales tax. If you need assistance with this application or have already applied and have been put on a schedule that will create challenges for your business, we may be able to help you.
Failure to register, collect, and pay sales taxes could make your company liable for every penny of sales tax that should have been collected from customers. Generally, the Department of Revenue can look at your company’s operations as far back as 3 years from the date the sales tax return is due. Add it up and you may be liable for a devastating sum of money. If your company has not been filing sales tax returns at all, then the statute of limitations is open and they may be able to look beyond 3 years in the past.
So here’s my advice:
If you register a company that is selling a taxable product or service, then you should immediately register to pay sales tax and begin collecting and remitting sales tax to the Florida Department of Revenue. Don’t put your business at risk. It’s not worth it.
We can help with you with this. Contact us for more information.