Any business that sells goods or taxable services within the state of Texas to customers located in Texas is required to collect sales tax from that buyer. This will include all online businesses. Any seller which conducts business and has a major presence within the state must collect sales tax in Texas must pay taxes to the state. Therefore, these sellers required to file for a Sales tax certificate. By not doing so the business may face sanctions or other types of penalties. Additionally, depending on the businesses location and tax jurisdiction, localities such as counties, cities, and other districts can also add additional sales and use taxes.
Do you need to get a Sales Tax certificate in Texas State?
You may need a Sales Tax Certificate if any of the following apply your business:
- You have a physical office or place you conduct
- You sell or ship products to a buyer in Texas
- You have a distribution location such as a storage area or warehouse space
- You have employees physically present in Texas
- You have changed your business structure or moved to a new location
- Your business purchases wholesale items for resale in the state of Texas
- Your business provides taxable services within the state of Texas
What constitutes taxable services in Texas State?
- Commercial real property remodeling and repair
- Construction companies that charge for materials
- Credit Repair and reporting type services
- Data processing services
- Debt collection agencies
- Internet or information provider services
- Labor that is taxable (usually labor used in the production of tangible goods)
- Personal accommodation services
- Residential real property services
- Recreational amusement services
- Satellite and Cable television providers
- Security providers
- Telecommunications providers and similar services
- Telephone answering services
- Transmission and distribution services for utilities
- Vehicle parking and storage facilities
Why do I need a Sales Tax Certificate to purchase wholesale items for Resale in the State of Texas?
As a wholesale company conducting business in the state of Texas, you are required to have a sales tax certificate when purchasing items at wholesale prices, Therefore, suppliers must request a copy of your resale certificate before selling you items at wholesale prices.
Do you have to collect Sales Taxes from out of state buyers?
While you may not collect sales taxes from your out of state customers, you are still required to collect their information and report it to Texas State.
Do you need to collect sales tax on shipping and handling of merchandise?
If you sell tangible goods in Texas that are taxable than you would charge sales tax on shipping and handling charges.
Is there sales tax on drop shipments in the state of Texas?
A drop shipment is where a seller (most times out of state) sells a product which is then delivered to a consumer by a third party shipper. In most instances, drop shipments in Texas are required to have sales tax added
Are there any exemptions to taxable items sold?
Leases on motor vehicles, safety apparel, certain medical goods and equipment, groceries, raw materials and machinery, newspapers, and general pollution control equipment are tax exempt