Guide To St. Louis Small Business Taxes
Guide To St. Louis Small Business Tax Deductions

For most new businesses, staying on top of sales tax obligations is a headache. This guide breaks down the key steps and concepts you need to know to be a sales tax pro. You can also use our sales tax calculator to look up the tax rates for any location in the United States, or check out our state specific guides for more information about sales tax in your state.

What is Sales Tax?

Freelancers, independent contractors and small business owners who expect to owe at least $1,000 in taxes need to estimate and pay quarterly taxes. If you don’t pay them, or don’t pay enough, you can be hit with penalties and interest, and open yourself up to all kinds of unpleasantness.

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Sales tax, also called 'Sales and Use Tax,' is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services. State and local governments require businesses to collect sales tax from customers and submit tax payments to the appropriate governmental agencies.

Note: Not all states levy sales tax. Delaware, New Hampshire, Montana, Oregon, and most parts of Alaska do not have sales tax.

Taxable Goods and Services

Not all goods and services are taxed. Each state has its own set of policies, and rates can even vary from one county or city to another. However, there are some general guidelines for determining which goods and services are taxable and which aren’t.

Goods

Tangible, personal property is usually subject to sales tax. Some examples of commonly taxable goods include:

Furniture
Motor vehicles
Computers
Home appliances
Books
Raw materials (lumber, cloth, etc.)
Potted plants
Rental Properties

Most states do not tax goods that are considered 'necessities.' Typical examples include: groceries, medications, clothing, and gasoline.

Services

There is no hard-and-fast rule for determining which services are taxable across all fifty states. However, note that your business may be required to collect sales tax if it offers one of the following services:

Services to tangible personal property: installation, inspection, maintenance, or repair of your customers’ stuff.
Services to real property: lawn mowing, snow removal, or utility repair of your customers’ property.
Business services: advertising, consulting, public relations, or human resource services your company provides.
Personal services: beauty care, pet grooming, dry cleaning, and tour guide services your company provides.

Tax-exempt services often include medical care, educational services, and some professional services. Other types of services are exempt on a state-by-state basis.

Register for Sales Tax

When you are registering for Sales Tax, you are essentially registering for a Seller's Permit. There is also something called a Resale Certificate, which allows you to save money on purchases for resale.

Get a Seller's Permit

All businesses that sell taxable goods or services need to get a seller's permit. States issue these permits, sometimes called a Sales Tax Permit or Sales Tax Certificate of Authority, in order to keep track of where sales tax revenue is coming from.

To register for a seller's permit, visit the sales tax section of your state’s Department of Revenue homepage. You will need some basic information about your business, so make sure you have access your business formation paperwork as well as your Employer Identification Number (EIN).

Although most states offer this permit for free, a handful of states assess a small registration fee.

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Learn how to obtain a seller's permit in your state.

Save Money with a Resale Certificate

Businesses can use a resale certificate, also known as a reseller's permit, to avoid paying sales tax when purchasing goods for resale. Consider the following examples:

(1) Joe is the owner of an electronics store. His company purchases computers, smart phones, and software in bulk at wholesale prices to resell to his customers in his store. With a resale certificate, Joe’s business is able to avoid paying the extra cost of sales tax on these purchases.

(2) Wendy owns a business that builds and sells custom furniture. When her company purchases wood, fabric, fasteners, and other raw materials used in constructing their products, they use a resale certificate to avoid paying sales tax on these items.

In this way, resale certificates prevent goods from being taxed multiple times before they reach the end consumer.

Download myspace video macsoftfreethsoft. Note: Not all business purchases are exempt from sales tax. Here’s a list of common items that are not eligible for resale exemption:

Goods you or your employees purchase for personal use.
Goods your business gives away for free or as gifts.
Goods your business uses to conduct business, like office supplies, equipment, etc.
Goods your business rents for use and not for re-leasing.

Guide To St. Louis Small Business Taxes

To obtain a resale certificate, visit the sales tax section of your state’s Department of Revenue homepage. Many states allow you to download the certificate online for free.

Calculate Your Sales Tax Obligations

To avoid fines and the risk of costly audits, it’s important for business owners to collect the correct rate of sales tax from paying customers.

When calculating Sales Tax there are 3 kinds of sales you'll need to consider:

Store Sales
In-State Sales
Out-of-State Sales

Store Sales

For traditional business owners selling goods or services on site, calculating sales tax is a cinch: all sales are taxed at the same, local rate. Here’s an example of what this scenario looks like:

Emma owns and manages a hardware store in Columbus, Ohio. Since building and construction materials are taxable in the state of Ohio, Emma charges her customers a flat-rate sales tax of 7.5% on all sales. This includes Ohio’s sales tax rate of 5.75%, Franklin County’s sales tax rate of 1.25%,