Sales tax. You have to collect it from your customers, and how much you need to collect and when and where you need to collect it varies. With more than 13,000 sales tax jurisdictions in the U.S., knowing how to find the right sales tax rates can seem like the stuff of nightmares.
But it doesn’t have to be. Sales tax software makes it easy to find sales tax rates and ensures you charge your customers the right amount.
What’s Usually Subject to Sales Tax?
Part of finding the right sales tax rate involves knowing the 4 W’s when you calculate and collect tax:
- What: What’s taxable can vary by jurisdiction. Some states don’t apply sales tax to clothing or other necessities while others do. In some jurisdictions, there’s no sales tax on digital products, like music downloads or e-books.
- Where: Where the buyer lives also influences the sales tax rate, particularly if you have nexus in their state.
- When: Some jurisdictions have sales tax holidays, during which certain products are exempt from sales tax.
- Who: In some states, nonprofit organizations and government agencies are exempt from paying sales tax. Others may be exempt from tax if they intend to resell the products.
How to Find Sales Tax Rates (the Hard Way)
Calculating sales tax seems fairly simple. You multiply the product price by the jurisdiction’s sales tax rate. For example, if your business is based in Pennsylvania where the sale tax rate is 6% and a PA-based customer buys $50 worth of products from you, $50 multiplied by 6% (0.06) is $3.
Things get more complex when you sell to customers in other states where you don’t have a physical presence. You’ll need to determine where you have nexus and need to collect tax from your customers. And with sales tax varying across jurisdictions, the process can become complicated. Mistakes can be costly and time-consuming as well. A simple error could result in a state notice and a potentially hefty fine from a state tax agency.
How to Find Sales Tax Rates (the Easy Way)
Learning the ins and outs of sales tax, then calculating the rates for your business is time-consuming — and we’d bet you have better things to do than manually calculate sales tax on each order. Fortunately, there’s a better way.
The easy way to find sales tax rates is with TaxCloud.
Our sales tax software gives you access to Taxability Information Codes (TICs), those ever-changing codes that let you figure out when, where, and how much tax to charge. Our TICs are up-to-date, meaning we’ll automatically calculate and collect sales taxes when applicable
When you set up your store, assign the appropriate TICs to your products. Our sales tax software can then apply the right sales tax rate to orders while accounting for exemptions and sales tax holidays. Everything happens automatically, so you can focus on what matters most to your business, not sales tax.
TaxCloud makes finding sale tax rates a snap. Register today and see how it works for yourself.