OH Sales Tax 101

When and How to Collect Sales Tax in Ohio

by Mark Faggiano

Ohio sales taxOhio Sales tax

This blog post may now be out of date. For our most up-to-date info on Ohio sales tax, check out our “Ohio Sales Tax Guide for Businesses.”

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!

  • Beth

    Our business is in KY and we are buying a Metal building in IN but having it shipped to OH then which state do I pay the sales tax too? The vendor in IN is not charging sales tax. Thanks, Beth

  • Hi Beth, I recommend contacting a sales tax pro to make sure you stay in the right on this one. Here’s our list of vetted sales tax pros: http://www.taxjar.com/sales-tax-accountant-directory/

  • Sarah Fromholt

    I’m located in Dayton, Ohio I made one sale on Etsy and then realized that I need to sign up for sales tax. My sale was to a person in Alabama. Does this effect the sales tax?

  • Donna K

    I have a current location in Ohio and Pennsylvania. I am starting to sell online. Do I charge everyone the sales tax rate I currently pay for each location? What about the orders shipped out of state?

    • Hi Donna,

      You only charge sales tax to buyers in states where you have sales tax nexus (in your case this is at least Pennsylvania and Ohio). You charge the rate based on whether your state is origin or destination-based. I recommend checking to this eBook to get yourself started and avoid any pitfalls: http://www.taxjar.com/guides/intro-to-sales-tax/

  • Ryan Black

    I have an online business in Ohio and sell to the entire United States. We do not have a physical location where we sell and are strictly online. We make some of the products and purchase others wholesale and we pay sales tax on those purchases. Do I have to charge sales tax to my customers? Thanks!

    • Hi Ryan, you only have to charge sales tax in states where you have sales tax nexus. Here’s more about the factors that create nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/ You ALWAYS have home state nexus even if you just sell from your kitchen table. That’s where your business is. So you’d definitely have nexus and need to register for an Ohio sales tax permit.

      As for paying sales tax on items you purchase, unfortunately, sales tax is on the transaction, not the item. So while it may not seem fair to charge sales tax on an item for which you already paid sales tax, that’s the law. That said, you can get a reseller’s certificate so you no longer have to pay sales tax on items you purchase for resale.

      I know this can all be a puzzle, so I recommend you check out our Sales Tax 101 Guide: http://www.taxjar.com/guides/intro-to-sales-tax/

      I hope this helps. Let me know if you have any more questions!

    • Hi Ryan,

      You need to charge sales tax in states where you have nexus. Here are the factors that create nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/ You will always have nexus in your home state (Ohio in this case,) even if you just work from your kitchen table. That’s because your business is located there.

      Another downer is that sales tax is on the transaction, not the item. So even if you pay sales tax on an item and then resell it, you still need to charge sales tax on the transaction. That said, you can apply for a reseller’s permit from the Ohio Department of Taxation and that way you won’t have to pay sales tax on items you plan to resell. That could save you some hassle in the long run.

      Sales tax has a lot of intricacies like this, so I recommend you check out our Sales Tax 101 Guide: http://www.taxjar.com/guides/intro-to-sales-tax/ We also have a very active Facebook group where sellers and tax pros answer your questions here: https://www.facebook.com/groups/SalesTax4EcommerceSellers/

      I hope this helps!

  • Heidi Plas Gamble

    Hi ! My husband and I have a Etsy business and only make custom wooden signs when orders come in, we do not stock inventory . We have no employees and run our shop strictly out of our home. Do we need a business license? Do we need to charge sales tax on handmade signs? We are not sure if we are considered a nexus? We haven’t charged sales tax yet because we are so unsure, all the information we read seems to be hard to understand.Please help….we started the beginning of the year and want to make sure we are doing things correctly and by the book. Where do we begin? We live in lorain county ohio!! Thank you so much.

    • Hi Heidi,

      Your handmade store sounds awesome!

      Because you do business in Ohio then you do have sales tax nexus in Ohio. (It doesn’t matter if you have inventory on hand or not, you’re doing business activities there.) So you’d register for your Ohio sales tax permit and charge sales tax to buyers in Ohio. If you have sales tax nexus in other states (it doesn’t sound like you do, but you never know) then you’d need a sales tax permit in that state, too. This would be a really great place to start to wrap your mind around sales tax: http://www.taxjar.com/guides/intro-to-sales-tax/

      We also have a great Facebook group full of sellers and sales tax experts that are happy to answer questions, too: https://www.facebook.com/groups/SalesTax4EcommerceSellers/

      Good luck with your sales tax!

      • Heidi Plas Gamble

        Hi and thanks for responding! Do I charge sales tax on all my items or just items sold within Ohio? Thanks again

        • You only charge sales tax on items shipped to buyers in a state where you have sales tax nexus. So if you only have nexus in Ohio, then you’d only charge sales tax to Ohio buyers. I hope that helps!

  • Katie Hall

    Hello, I was wondering another aspect of sales tax in ohio. I want to sell soaps and socks at craft fairs and farmers markets.

    1. Can I add sales tax to my price tags so my customercustomers will know their total price?

    2. Do I have to charge different sales tax depending on where I am even though my home is the address of my shop?

    • Hi Katie,

      Great questions!

      1.) Yes, you can. I’ve seen a few states say that you need to separately state the sales tax amount, so you may want to either err on the side of caution and state the tax separately or give Ohio a call and make sure it’s okay. Here’s their number: https://blog.taxjar.com/state-sales-tax-phone-numbers/

      2.) You would need to charge based on the point of sale, so that would be the actual spot where you’re standing at that moment. Most of the time the organizer of the craft fair or farmer’s market has sales tax info for you. I hope this helps!

  • Tess Barsody

    Hello, I have an online retail business, just registered for the vendor license. I know when selling to someone in OH, I need to charge a sales tax, but what do I charge when I sell to someone out of the state of Ohio?

    Thanks for the help

    • Hi Tess,

      You only need to charge sales tax to buyers in states where you have nexus. So if you don’t have nexus in any other states, you wouldn’t charge sales tax to buyers in those states. If you DO have nexus in another state and need to charge sales tax, with a few exceptions, you’d charge sales tax based on the rate at the buyer’s ship to address. You can read a whole lot more about that here: https://blog.taxjar.com/charging-sales-tax-rates/

      I hope this points you in the right direction!

  • Diane B

    I have a resale registration # issued by Indiana (where I have a business nexus) In trying to purchase items for resale as tax exempt I was denied unless my purchase totaled at least $100. from a business in Ohio. Is this right? I think not!!

    • Hi Diane,

      Retailers don’t have to accept resale certificates at all. (Target is a prime example.) Sorry to be the bearer of bad news!

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