Sometimes changes to your business mean that you need to update your sales tax permit with the state. This generally occurs when:
- Your business structure changes
- Your business ownership changes
- Your business location changes
Of course, like with everything related to sales tax, each state is slightly different. So we’ll have a look at when you might need to, in general, update your sales tax permit, as well as how to update your permit when the time comes.
When to Update Your Sales Tax Permit
Changes to Your Business Structure
Many online sellers start out as sole-proprietors and eventually, as the business grows, switch to an LLC or S-Corp business structure.
You should report to your state’s department of revenue when you change your business structure. This helps the state know who they are dealing with when it comes to sales tax, and it also protects you personally. Nobody likes to think about an audit, but in that unlikely event, you’d much rather the state pursue your S-Corp or LLC rather than your own personal records and assets!
Changes to Your Business Ownership
If you transfer your business to someone else, or are no longer responsible for collecting, filing and remitting sales tax for your business, it’s especially important to inform your state’s department of revenue of the change.
As the California BOE puts it: “If ownership records are not kept current, previous owners are generally liable for taxes, interest, and penalties incurred by the business after the transfer.”
Ouch. It’s no fun to find out you’re on the hook for sales tax when you no longer own or work in a business.
In the matter of the sell of your business, a breakup of a partnership, or even a divorce between spouses, make sure that the sales tax permit is in the correct name or a party who is no longer involved in the business may be in for a nasty surprise!
Changes to your Business Location
Whenever you receive your sales tax permit, it comes with a note that says “Display prominently at your place of business.” For many online sellers, especially those just starting out, this means sticking this bit of nuisance paper in a corner of your garage or home office somewhere.
But it is required by law to display your sales tax permit. So if you change business addresses or open up a second location, be sure to let the state department of revenue know so they can give you another sales tax permit to “display” somewhere on your premises!
How to Update Your Sales Tax Permit
Though every state is different, in most cases you can update your sales tax permit through the same online portal where you first registered for a sales tax permit. This is often the same place where you go to file and pay sales tax.
You can find handy links her on where to update your sales tax permit. (Choose your state and then find the link for that state’s sales tax web portal under #2.)
Some states will charge you a fee for modifying your sales tax permit. This is generally under $20.
I hope this has shed some light on when to update your sales tax filing. Do you have questions or something to say? Start the conversation over at our Facebook group Sales Tax for eCommerce sellers, or leave a comment below!