SALES TAX CALCULATOR
What is sales tax?
Sales tax is a consumption tax that’s imposed by governments, in action when a good or service is sold. A standard tax is imposed at the point of sale, which is collected by the retailer and passed on to the government. But a business can also be liable for sales taxes in a given jurisdiction, if it has a nexus there.
Some states are completely void of sales taxes altogether, so if your business is in one of these states, you likely don’t have to worry about taxes at all: Delaware, Montana, Oregon, New Hampshire and quite a few parts of Alaska.
More on sales tax
Conventional sales taxes are only charged to the end user of a good or service. But, most services now pass through many stages before they are ready to be sold. This is often handled by different entities, so you could be charged sales tax at the stages when you are buying from someone else to produce something – for instance if you’re a yarn maker buying wool.
You don’t have to pay sales taxes in instances like this. To avoid paying sales tax in this kind of case, you can do things like acquire a significant amount of documentation, such as getting a resale certificate clarifying that you’re not the end user. The people you sell to might be the end user, so they’d have to pay sales taxes.
What is a nexus?
If your state is one that has sales taxes, you might need to pay these depending on that government’s definition of nexus. A nexus is generally defined as a physical presence. But, this presence isn’t limited to having just an office or a warehouse. It can also mean just having an employee in a state, or an affiliate – like another company who directs traffic to your website and in return gets some of the profits.
This can also include just a web presence too now, as ecommerce becomes bigger and more states are recognising the industry as becoming more powerful. For instance in New York there are laws requiring internet retailers to pay sales taxes despite lack of physical presence in the state.
Should I use a sales tax calculator?
Once you have concluded whether or not you need to pay sales tax, you will need to calculate just how much you have to pay. Calculating sales tax on your own can be a long, strenuous process that takes time and energy away from your business – you could have multiple items all requiring taxation, need to combine taxes if the products have been through a lot of manufacturing, and could face lots of problems if your tax calculations end up being wrong. This is why using a sales tax calculator can be a huge help.
TRUiC has a very useful sales tax calculator. It’s simple and easy to use, and can provide you with results instantly. Be sure to visit the site to try it out yourself.
How to use the sales tax calculator
Using the TRUiC sales tax calculator is different to other ones online. They ask you more specific information and allow you to work anything out in two simple steps:
Look up sales tax rate
This is the first step. You can find the sales tax rate in any city in the U.S. For purchases that are made in person, input the city and zip code of the location. For any other types of purchases – by mail, phone or online, input the shipping city and zip code. There is one exception to this and that is unless your state’s taxation policy is origin-based, in which case it’s your location.
Calculate sales tax on products for sale
All you have to do in this step is find the total cost of products, including the sales tax of the city it’s sold in. To do this, input the total cost of what you’re selling, and the total sales tax rate from step one.