Should you collect sales tax from customers in Ohio? You might not actually know considering how confusing sales tax rules and regulations can be. In fact, you might owe sales tax in the state and not be aware of it, only to get hit with a penalty later.
To help you out, below you’ll find explanations for why you may or may not have sales tax nexus in Ohio. The examples cover the most common types of businesses that use TaxJar. Make sure, though, if your case is more unique, to consult a tax professional just in case.
You’re an online seller living anywhere but Ohio
If you don’t live or have any kind of physical presence in Ohio, then you do not have sales tax nexus in Ohio. Since you don’t have sales tax nexus, you shouldn’t have to worry about sales tax in Ohio at this time.
You live and/or operate your business in Ohio
If you operate your business out of Ohio, then you have a physical presence in the state, thus you also have sales tax nexus and must register for an Ohio vendor’s license. You may also have nexus even if your business isn’t headquartered in Ohio. Other aspects of physical presence, such as an employee, a warehouse or a brick and mortar store, may also give you sales tax nexus in Ohio.
Fortunately, Ohio is one of the simpler states when it comes to calculating how much sales tax to collect. Ohio is an origin-based sales tax state, meaning that you collect sales tax at the sales tax rate where your business is located. For example, if you live and operate your business out of Alliance, Ohio, you must collect sales tax from Ohio buyers at the local Alliance sales tax rate of 7.25%. This number includes the 5.75% Ohio state rate and 1.5% Columbiana County rate. Unlike many cities, the city of Alliance doesn’t levy a local tax.
You live out-of-state but use a 3rd party fulfillment service like FBA
There are no Amazon warehouses in Ohio, so FBA sellers generally don’t have to worry about nexus in Ohio (unless you have some other physical presence). But if you use some type of warehousing or 3rd party fulfillment service in Ohio, then you do have sales tax nexus and are required to register for a Ohio vendor’s license and collect sales tax from Ohio buyers.
Filing Sales Tax in Ohio
Vendors are assigned a sales tax filing schedule after they apply for their Ohio vendor’s license. This might be monthly, semiannually or at another frequency. Monthly returns are due on the 23rd of the month after the taxable period ends.
If you need to file a sales tax return in Ohio, TaxJar has your back. You can now enroll in AutoFile for the state of Ohio and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.
Sales Tax on Shipping
Vendors are required to charge sales tax on the amount charged to Ohio buyers for shipping.
Summary: Ohio’s origin based sales tax keeps things surprisingly simple
It’s nice to come across a state that isn’t too complicated, and Ohio keeps it simple. Basically, if you have nexus in the state, whether you operate out of the state or have an affiliate or what have you, then you owe sales tax. If you live out of the state and have no physical presence (i.e. nexus), you don’t have to worry about it.
Furthermore, if you do have nexus, then you only have to worry about the counties that your business resides within. For example, Carroll County has a 1% sales tax in addition the Ohio base rate of 5.75%, bringing it to 6.75%. If your business only operates out of Carroll County, that’s the only rate you need to collect from buyers.
Do you have questions about collecting sales tax in the state of Ohio? Start the conversation in the comments!