Does My Business Need To Charge Sales Tax?
Online sellers and small businesses want to know if they have to concern themselves with sales tax, and if, so what is the best way to tackle sales tax in Georgia?
- Do you need to collect Georgia sales tax?
- What types of transactions or customers should you collect tax from?
- What percentage do you collect?
- What do you do after you’ve collected the sales tax?
Is there sales tax nexus in Georgia?
Sales tax nexus is another way of saying “significant presence” in your state. The good news is you do not even need to begin thinking about Georgia sales tax unless your business represents a significant presence in the state.
Georgia recognizes a business or online seller to have sales tax nexus in the state if you have any of the criteria in the state:
- A place of business or an office
- An employee
- Inventory in a warehouse
- Ownership of personal property
- The delivery of merchandise in Georgia
- Independent contractors or other representatives in Georgia
If you sell on Amazon FBA, do you have sales tax nexus in the state of Georgia?
If you are an Amazon FBA seller, there is a chance you have sales tax nexus in Georgia. Storage of physical products may cause sales tax nexus. There is at least one Amazon Fulfillment Center in Georgia, meaning your items could be shipped out of Georgia.
To find out if items you sell are stored in a Georgia FBA warehouse, you can log in to Amazon Seller Central and pull your inventory report to find out where your Amazon inventory ships from.
Are you selling something taxable in Georgia?
You may have defined that you have sales tax nexus in the state of Georgia. Next, you need to find out if you are selling something taxable.
Services in the state of Georgia are not typically taxable. If you sell a service such as wedding coordination or copywriting, you can sleep well knowing that you can forget about dealing with sales tax.
Most tangible, or touchable, products are taxable in Georgia, but there are some exceptions. These exceptions include prescription medicine, medical devices, certain groceries, chemicals, and machinery used in research and development.
If you sell tangible products like pencils, then you need to charge sales tax to Georgia customers.
But, you won’t need to charge sales tax to your Georgia clients if you own a landscape maintenance company.
If you have determined your products are taxable and you have sales tax nexus in Georgia, the next step is to file for a sales tax permit.
Register for a Sales Tax Permit
After you’ve determined you sell a product for which you need to charge sales tax and you have nexus in Georgia, you will want to apply for a sales tax permit. This step is critical since it is illegal to collect sales tax without a sales tax permit in Georgia.
Collecting Sales Tax in Georgia
After you have registered for the sales tax permit; you are ready to collect sales tax.
How much sales tax should you collect?
The actual amount you collect for sales tax will depend on if you are based in-state or out-of-state.
Collecting Sales Tax If Your Business Is Based In Georgia
Georgia is considered a destination-based sales tax state. If you (or your business) reside in Georgia, you should collect sales tax based on the sales tax rate where the customer’s address is located. The tax will vary from county to county within the state.
How to Collect Sales Tax if you are not located in Georgia
Georgia expects sellers from outside the state who made a sale in Georgia to charge sales tax based on the the buyer’s address.
How to File and Pay Sales Tax in Georgia
There are some options available for paying collected sales tax in Georgia:
- You can file sales taxes online at the Georgia Department of Revenue’s website. Just send the payment through the online system on the website.
- You can use Form ST-3 and file sales taxes through the mail.
Should You File Sales Taxes in Georgia?
You’ve found that the answer to that question depends on your physical location and the types of products you sell. Now that you understand the basics about sales tax in Georgia, you can get back to running your business.
If you have any questions, be sure and contact a business tax planning attorney in Atlanta, we will be more than able to assist you.