A business license is required if you’re selling taxable items or services in Texas. However, it isn’t all you’ll need; the Lone Star State also requires your business to have a sales tax permit. What is it, and does your business really need it? We’ll answer these and other commonly asked questions.
What Is a Sales Tax Permit in Texas?
The sales tax permit in Texas allows businesses to collect tax on the items and services they sell to consumers. It is also required to conduct business legally in the state.
Do I Need a Texas Sales Tax Permit?
The answer to the question “Do I need a Texas sales tax permit?” is yes if you conduct business in the state of Texas and do the following:
- Sell, rent or lease taxable goods
- Provide taxable services
- Acquire taxable goods or services from suppliers that are out-of-state and don’t hold a Texas sales tax permit
Is a Texas Sales and Use Tax Permit the Same as a Resale Certificate?
The Texas sales and use tax permit is not the same as a resale certificate. The tax permit allows a business to sell taxable items or services in the state. The resale certificate allows business owners to purchase products for resale without paying tax.
What Is a Texas Sales and Use Tax Exemption Certification?
A Texas sales and use tax exemption certificate is a document that allows items that would otherwise be subject to tax to be purchased tax-free.
Who May Issue the Tax Exemption Certification?
The tax exemption certificate may be issued by government, religious, educational, or public service organizations. It may also be issued by an individual who purchases an item that is deemed exempt in Chapter 151, Subchapter H of the Tax Code.
How Do I Become Tax Exempt in Texas?
You can become tax exempt in Texas by completing form AP-204, Texas Application for Exemption – Federal and All Others. You will also need to include other items with your application, including:
- A copy of the IRS-issued exemption determination letter
- A statement showing for which organization a corporation holds title
- Proof that the organization is exempt from or not subject to Texas franchise tax
What Are Tangible Goods?
Tangible goods, also known as tangible personal property, are legally defined as personal property that one can see, weigh, measure, feel, or touch, or that is otherwise perceptible to the senses. Examples of tangible personal property include automobiles, business equipment, and furniture.
Do I Have to Charge Sales Tax in Texas?
You have to charge sales tax in Texas if you’re selling taxable items online to Texas customers. You also have to charge sales tax if you offer services in certain industries, such as:
- Cable and satellite television
- Credit reporting
- Data processing
- Debt collection
- Property repair
Please note that this is by no means a complete list.
How Long Do Texas Sales Tax Permits Last?
Once active, Texas sales tax permits are renewed automatically each year by the Texas State Comptroller, so there is no need for business owners to renew their permits individually. However, the tax permit is only valid if you’re actively engaged in business as a seller.
What Does “Engaged in Business” Mean?
If you’re doing any of the following, it’s considered to mean you’re engaged in business in the state of Texas:
- Getting your receipts for the lease or rental of tangible personal property in Texas
- Conducting business in Texas via independent contractors, agents, or employees
- Maintaining or occupying places of business, including an office, distribution location, sample or salesroom, storage, or warehouse
- Promotion of any event involving the sale of items that are taxable, including trade days and flea markets
- Having a person who operates in Texas under your authority to take orders, deliver, or sell taxable items, such as a solicitor, salesperson, canvasser, or agent
- Allowing licensees or franchisees to operate under your business’s trade name if they’re required to collect Texas sales and use taxes
- Being involved in the direct sales of taxable items via the use of independent salespeople
What Are My Responsibilities Once I Receive My Sales Tax and Use Permit?
As a business owner with a Texas sales tax and use permit, you have several responsibilities. Once you receive your permit, you must ensure that it’s posted at your place of business. You will also be responsible for collecting sales tax on all of your taxable sales, as well as ensuring you pay your sales and use tax on all purchases you make that are taxable.
Once you have your permit, you will be responsible for both reporting your sales and use taxes and paying them on time. Finally, being a permit holder requires you to keep adequate records of the sales you make and the taxes you pay.
What Do I Need to Apply for a Texas Sales and Use Tax Permit?
To apply for a Texas sales tax permit, several documents will be required. For sole proprietorships, the owner’s Social Security Number (SSN) is required. Partnerships will require SSNs or Federal Employer Identification Numbers (FEIN) from each partner.
Corporations will need to submit the corporation file number issued by the Texas Secretary of state, as well as the SSN for each officer or director. All businesses will need to have and submit their North American Industrial Classification code.
How Do I Get a Sales Tax Permit in Texas?
To get a sales tax permit in Texas, you will need to either apply online via the Texas Comptroller’s Online Sales Tax Registration Application System or print the application from the Texas Comptroller’s Sales and Use Tax Forms web page.
Can My Application Be Delayed or Rejected?
Yes, your application can be delayed or rejected for several reasons. Incorrectly entering information may require you to fill out another application, which can delay the delivery of your sales tax and use permit. The same is true if you leave parts of your application blank. In fact, even one missing piece of information can be enough to cause rejection or delay in the processing of your application.
How Long Will It Take To Receive My Permit?
If your application is complete and accurate, you can expect to wait two weeks or longer to receive your permit if you apply online or mail your printed application to the Texas Comptroller.
How Do I Get a Texas Sales Tax and Use Permit Without Having to Worry About Delays or Rejections?
The only way to get your Texas Sales Tax and Use permit without the worry of delays or rejections is to ensure your application is as complete and accurate as possible. However, doing so may still not be enough to ensure your application will be received on time.
Is There Another Way to Eliminate the Possibility of Delays and Rejections?
Yes, there is another way to eliminate the possibility of your application getting delayed or rejected. A private service is available from a company called FastFilings. They assist with filling out forms for Texas Sales Tax and Use, and other permits your business may need.
How Does FastFilings Help Me Avoid Delays and Rejections, and Speed Up the Application Process?
FastFilings helps you avoid delays and rejections of your Texas Sales Tax and Use Permit application by reviewing your application and documents and checking them for errors and by not ordering permits until all of the required information has been included.
They help expedite the application process by ordering your permit directly through the issuing office that’s nearest to you. Their 3-step process makes it easy to get your application documents reviewed and your Texas Sales Tax and Use Permit delivered fast.