By Taivan Acer
SALES TAX CALCULATOR
What is sales tax?
A sales tax is a tax that’s paid to a government body on the sale of goods and services. A conventional sales tax happens at the point of sale, when collected by the retailer, and is passed on to the government. But businesses are also liable for sales taxes in a given state if they have a nexus there. A nexus can be a physical location of the business, an affiliate, or something else, depending on laws of that state or jurisdiction.
A tax paid directly to a governing body by a consumer is called a use tax. Laws often provide for the exemption of certain goods or services from sales and use tax. There is no VAT system in place in America.
What is a nexus specifically?
How much sales tax a business owes to a government depends on that government’s definition of nexus. In general, a nexus is defined as being a physical presence. But this presence isn’t limited to having an office or a warehouse in that place. It can also be applied if you have an employee in the state, or an affiliate – like a partner website that helps you to gain traffic on your page for a sum of the profits. Recently it has also started applying to companies with an online presence, despite a lack of physical presence, because business is still conducted there. For instance, in New York ‘Amazon Laws’ have been passed that require retailers working on the internet to pay sales taxes, despite not physically existing in the state.
Taxable goods
Before you decide to check the sales tax rate for wherever you are, you should first check whether you actually need to pay taxes on services. For instance, most states don’t tax goods that are considered everyday necessities.
Every state has its own set of policies and specifics can even vary depending on the county or city you’re in. But there are general guidelines you can look at to get a good idea of which goods and services are taxable. As previously stated, necessities aren’t necessarily taxed. Some taxable goods include furniture, motor vehicles, computers, books, home appliances and potted plants. Examples of goods that are necessary and so not taxed include food, clothing, medications and gasoline.
Taxable services
Services are a bit harder to determine rules for because they aren’t as concentrated or specific. But you could be required to collect sales tax if you do any of the following: business, personal, real property and tangible property services. These can include pet grooming, lawn mowing or installation.
Use a sales tax calculator
Sales tax calculators are an incredibly helpful tool to use once you’ve determined whether your service or good is taxable or not. They can help you to calculate the sales tax rate for any city in the U.S. TRUiC provides an easy to use and very useful sales tax calculator, that can be used following these two quick steps, and results are provided instantly:
- Look up the sales tax rate. For any in-store purchases enter the zip code and store city. For any other purchases, input the zip code and shipping city, unless you’re origin-based. Being origin-based means that if you make sales to your customers based in the state you’re in, you charge sales tax based on your location.
- Calculate the sales tax on products for sale. To do this you need to input the cost of the product or service that’s being sold as well as the total sales tax rate you generated in step one.
Head to this website to get to the calculator.
