Business and Sales Tax Registrations in the United States

In the United States, if you plan to sell products or provide taxable services, you will need to register to remit sales tax in all of the states in which you plan to sell products or provide taxable services.

Let’s say you just started a business and want to make sure you remit taxes to all of the right places, you will need to know a number of things before you begin: there are a couple of states which do not require a business to register for sales tax or do not levy sales tax at the state level. On a superficial level, those states are Alaska, Montana, New Hampshire, and Oregon. Other states may only require you to register if you sell certain items, and if you provide services you may not need to register at all. This process can get tricky and can leave anyone confused.

Wikipedia has a fairly comprehensive page on this topic, though it is not strictly related to business and sales tax: http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States.  A simple scan of this Wikipedia page can be daunting, and unfortunately there is not one single source to find out where and when sales tax will apply to your business. That is why compliance services provided by companies like Business Licenses, LLC are so invaluable.

On the surface and according to the copied Wikipedia link, Alaska does not have a state level sales tax: (http://www.tax.alaska.gov/programs/programs/index.aspx?10002), however, Chapter 70 of the Alaska Business License Act indicates that all businesses operating in Alaska must obtain a business license or face a $300 or more fine. This license is required for any business that transacts business in Alaska but there is no Alaskan State Sales Tax per se.

New Hampshire has no sales tax at the state level either (http://www.revenue.nh.gov/faq/gti-rev.htm) and there are no other state level licensing requirements like the one described above in Alaska.

To make matters confusing, in Washington you must apply for a State of Washington Business License in order to register for sales tax (http://bls.dor.wa.gov/file.aspx). Washington has a remarkably streamlined process with regards to licenses and it mainly has to do with the Washington Business License Application also known as the Master License in Washington.

If these last three paragraphs above make you think you need to read again just to be sure you understand, don’t feel bad -- that is a normal reaction to this topic.

Each state has its own quirk which can add to the frustration of starting a new business. There is no easy way to look at this issue, and the reason it is not easy is because there is no uniformity. The lack of uniformity is the cornerstone of the sovereignty of each of the states in America. This gives the American business landscape a rich and fertile ground ready to grow seeds of possibilities. Though, keeping this lack of uniformity in mind, businesses will decide where to do business because there are states that will attract certain businesses because of their tax policies and certain states which will repel business because of their tax policies.

If there is one lesson I took from grade school history class, it was that the industrial revolution occurred in some part because of the demand for uniformity. The onset of massive factories and the manufacture of interchangeable parts demanded uniformity. Without losing any sovereignty or the richness of the fertile business ground, can the states adopt a uniform approach to the registration for sales tax? Can there be one central hub where a business owner can indicate he/she wants to remit sales tax to X,Y,Z state without having to hire a lawyer or tax specialist?

The states can keep their various tax rates and policies or whatever they want, but the central hub would be where the business information can be uploaded and then distributed to various states, thereby registering the business for any applicable taxes.  Instead of going to https://aldor.efile.govconnect.com/web/ALO_CBR/WelcomeRegis.asp, http://bls.dor.wa.gov/file.aspx, AND http://www.boe.ca.gov/sutax/sutprograms.htm to register for sales tax in Alabama, Washington and California, you could go to ‘Salestax.com’, choose your states from a drop down box, and enter in your business information and all the relevant bits for each particular state.  Even if you choose Oregon or New Hampshire as a place you plan to do business, your receipt or proof of registration will indicate that there is nothing applicable there. To use this ‘salestax.org’ you would not need to hire a lawyer or possess any knowledge about the differing sales tax rates.  The site would provide you with tips and insight in regard to each state.

I attribute this idea to my recent filing of my tax return with Turbo Tax online and was so pleased with the ease of going to http://turbotax.intuit.com/ and entering my information once and three returns were generated. Turbo Tax alerted me to certain deductions and offered to see if there was a difference of filing one way versus another. It was well worth the fees I paid to use the service. Because I have to pay taxes in New York and New Jersey I was worried in the beginning looking through the respective websites and paper returns but Turbo Tax prepopulated my state returns using the information from my federal return and I never had to enter my information in more than once! I wish the same could be said for Sales Tax Registrations in the United States. The technology exists but the States are holding on firm to their individuality in this arena. For now, though, until the States decide to cede some of their individuality, Business Licenses, LLC  is your central hub for registering your business for Sales Tax in the United States.