Tax
Sales Tax
A state and local tax on retail sales that businesses collect from customers and remit — you're the collector, not the taxpayer.
Sales tax is a trust tax: your business collects it from customers on taxable sales and holds it for the state. It was never your money — which is why states pursue unremitted sales tax aggressively, and why the liability routinely reaches owners and officers personally even through an LLC or corporation.
Two questions drive everything. Where must you collect? Anywhere you have nexus — physical presence, or economic nexus once your sales into a state cross its post-Wayfair thresholds. What's taxable? That varies enormously by state: goods almost everywhere, SaaS in a growing minority of states, most professional services exempt but with plenty of exceptions.
Once registered in a state, you must file on that state's assigned schedule (monthly, quarterly, or annually) — including zero returns for periods with no sales. E-commerce marketplaces (Amazon, Etsy, Shopify's marketplace channels) now typically collect for marketplace sales, but direct-channel sales remain the seller's obligation.
Common pitfalls
- Spending collected sales tax as operating cash — the shortfall is a personal liability for owners and responsible officers
- Assuming services or SaaS are exempt everywhere because they're exempt in your home state
- Registering late after crossing economic nexus thresholds — back taxes come out of your pocket since you never collected from those customers
- Stopping filings when sales stop — missed zero returns generate penalties and can void a registration
Related service
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