From the course: Business Tax Foundations

Sales tax basics

From the course: Business Tax Foundations

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Sales tax basics

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- [Instructor] Sales taxes are a monthly hurdle for a lot of firms. Anyone selling a product to the public will almost certainly have to pay sales taxes. Fact, many services are also subject to sales taxes, but that varies considerably by state. You should check your state regulations to determine whether your firm needs to collect sales taxes. And if so, how much? This varies state by state and sometimes county by county or town by town. If you determine that you will need to collect sales taxes, you'll have to register with the State and get a registration or license number. Let me show you how this is done for one sample state, in this case, Connecticut. Now we're here at the State of Connecticut's Department of Revenue Services page. We're going to look at how you'll register for the sales tax number. Remember, though, there are two different kinds of taxes that we're going to pay to any state out there. There are taxes like the SUTA tax, State Unemployment Tax, that we'll pay to the Department of Labor in the state. And then we also have other taxes that we're going to pay to the Department of Revenue Services or whatever term they use for their tax collecting body. So you're going to have two different registrations with the state, two different ID numbers, perhaps two different passwords. Make sure that you keep these separate. Once we've identified and located the registration page, you'll come down and register. So they have the usual litany of information. You'd want to read through this, and then we click Next. Now we're going to let them know what we're doing. We're opening a new business in this case. And we're going to have to fill out the type of organization this is and some details around it. Once you've filled out the form, you're ready to proceed. You'll list the individual owners in the company. Once you've filled out all of the individual owners, you're ready to proceed. At this point, you'll be ready to register for the particular taxes that you have to pay. You'll go through and answer a series of questions that'll help the State determine which taxes you need to pay as an employer. Once you're done with that, you'll be able to select Next and finish the registration. One tax that almost everyone will have to pay is some sort of business entity tax. Think about this as a tax that the State charges you for setting up a business. Most states have one. Once you've finished filling out all the information about the firm, you'll be asked to verify all of that information and then submit it in order to get a final registration number and allow you to begin collecting sales taxes. Generally, you'll need to link your bank account to the State so they can withdraw directly from your bank account any time you owe taxes, fees, et cetera. Now you should be prepared to register to file sales taxes and take up selling product to the general public in your state.

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