Do you want to start a business in Texas and you need sales tax permit? If YES, here are 3 steps on how to get sales tax permit in Texas with ease. A seller’s permit gives a business the authorization to sell products and services within the jurisdiction granting the license.
Most states in the US require seller’s permits, as do some local authorities, including counties and cities. This permit might also be known as a “sales tax permit” or “sales tax license.”
In the , your need for a seller’s permit depends on the laws that govern your business and location. Look to local as well as state regulations to determine whether your business needs one. But once you sell tangible goods to the public, whether wholesale or retail, you need a seller’s permit.
Most US states also mandate service providers (e.g., attorneys, architects, consultants) to obtain seller’s permits. Even if the activities you sell are temporary—for seasonal or holiday businesses—you may be required to have a temporary seller’s permit.
Is Sales Tax Permit Mandatory for All Businesses?
Meanwhile, if you only deal in resale products, you may or may not need a seller’s permit, although it all depends on applicable state and local laws. The primary reason government requires seller’s permit is to allow them collect sales tax on business transactions.
In the , failure to obtain a seller’s permit could result in heavy penalties and fines as well as back taxes on previous sales. Additionally, the exact processes of obtaining a seller’s permit differ across the states, but generally you acquire one from the government agency that regulates businesses in your state.
In addition, unless you are selling products or services in a regulated industry such as health care, you don’t need a seller’s permit to conduct business online, but that may not be the case in your state and/or in your industry. This is one reason it is so crucial to check applicable laws to determine whether you need an online seller’s permit.
However, a seller’s permit is needed for digital goods in Texas as the state considers electronic items to be taxable. In terms of online sales, Texas residents who “sell more than two taxable items in a 12 – month period and ship or deliver those items to customers in Texas” must have Texas seller’s permits.
The website of Texas’s Comptroller further explains who must acquire a Texas seller’s permit. To note whether you are “engaged in business,” the state looks at whether your business:
- maintains a physical place of business, such as a warehouse, distribution centre, sales room, etc., within the state,
- Uses a sales representative or agent who operates within the state or independent salespeople involved in direct sales of taxable items,
- Receives rental or lease income from a property located within the state,
- Promotes any event involving sales of taxable items, and
- Otherwise conducts business in the state through others.
Although this list is not comprehensive, it covers the most common factors considered. “Taxable personal property” includes items such as furniture, toys, and art. Texas also mandates a seller’s permit for those who provide taxable services such as data processing and insurance.
In the state, even if you already had a seller’s permit for another business or if your business under another owner had one, you must apply for a new seller’s permit.
How to Obtain a Sales Tax Permit in Texas
One of the initial things you ought to do as a new business in Texas or when doing business within the state for the first time is to obtain for a Sales and Use Tax Permit. In Texas, there is no fee charged to register for the permit; nonetheless, you may be mandated to post a bond or security. Below are the necessary steps you are expected to take to acquire your permit in Texas.
- Apply and Present All Required Documents
To apply for the permit, you or your parent/legal guardian must be at least 18 years old. Then you will be required to provide basic information about your business, such as name and address, as well as a tax identification number—either your Social Security number (SSN) or employer identification number (EIN).
If a business doesn’t yet have an EIN, the Comptroller will issue a temporary one until you receive it and issue a new permit thereafter. You can register for the sales tax permit online, in person, or by mail.
In Texas, the Comptroller provides a stress free online registration application for a number of tax permits. First – time users will be mandated to create a profile, which you can later use to update your account, such as changing your mailing address or reporting the addition or closure of business locations.
2. Ask Questions When Necessary
If you have questions concerning the online application or if you prefer to speak to a customer representative in person, you can visit one of the state’s 23 Taxpayer Services and Collections field offices. Most offices are open Monday through Friday from 8 a.m. to 5 p.m. What if you choose to mail in your application?
You can do that by filling out and printing the application form and mail it to the Comptroller. If you have specific questions regarding your business, taxes owed, or the application process, you can call a nearby field office or call the Comptroller’s office toll – free at 1 – 800 – 252 – 5555.
3. Pick Up Your Permit
You now have a permit number and are ready to collect sales tax whenever a buyer makes a purchase from your business. This sales tax is paid to the state quarterly and is submitted along with the appropriate state tax forms.
Have it in mind that once you receive your Texas seller’s permit, the state expects you to display it conspicuously at your place of business and collect sales taxes on taxable sales. You must keep track of taxes collected and pay the appropriate amount of sales and use taxes to the state.
Texas was recently named one of the 10 most favourable states to do business, and the Texas Comptroller of Public Accounts is there to make doing business in Texas a breeze. However, collecting and reporting sales taxes to the government is one of the most important aspects of a business.
The same way keeping your business up to date on sales taxes is a critical part of your duties as an owner. You can do it yourself, but you may do well to seek the help of an expert.