With the freedom of being self-employed comes the sole responsibility for paying sales tax, a state-mandated surcharge on sales that varies from state to state.* Before you dig too deep on this topic, check with your state and local governments to find out whether you need to take care of it at all. (Tip: Consult the government website for your state. Often you'll find a section that contains detailed information about taxes in the state.)
If you're supposed to collect sales tax and don't, then you can be personally liable for that amount.
* Delaware, Montana, New Hampshire, and Oregon don't collect sales tax. (Lucky you, if you live there.) Exceptions may apply if you sell goods or products online to customers in states that do collect sales tax. We suggest you do some research if this sounds like you, or check with a tax pro to be sure.*
What is sales tax?
A sales tax is a fee imposed by many state and local governments. The seller charges it at the point of sale when you purchase or sell goods and services. The amount of tax you pay is typically figured as a percentage of the sale price. (Example: a 5% sales tax on a $10 purchase would be 50 cents.) Sellers, merchants, and service providers collect the tax and submit it to the state periodically throughout the year.
What is the sales tax rate?
It varies by location, so we can't calculate it for you. Your state and local governments set the sales tax rate. Check with your state government website or a tax pro to understand the rate, when it applies, and how to pay it.
Often, the statewide tax is combined with a local tax for a combined percentage. (Example: a statewide tax of 7.5% and a 1% county tax together make a rate of 8.5%.) This makes it easy on the buyer, but as a seller, you may need to separate out tax payments to your state and county or city. Again, we suggest checking your state's government website for details.
Does QuickBooks Self-Employed help me manage sales tax?
We focus on federal estimated taxes of your self-employed income. Because sales tax is levied by state and local governments, we can't help you calculate how much you're collecting or what you need to pay to the government. We can help you track sales tax payments and claim any associated deductions.