Ohio Sales Tax Guide
Chapter 3: Getting registered to collect Ohio sales tax
The first step toward proper management of Ohio sales tax involves getting registered with the Ohio Department of Taxation. We get a lot of questions regarding this and recognize it may be the most difficult hurdle for small businesses to overcome. Registering to collect sales tax in Ohio means you've acknowledged your legal responsibility to collect and consequently file and remit sales tax to the state.When do I need to register to collect sales tax in Ohio?
There are two ways to think about this question. The first involves a topic called "nexus". Nexus, in the tax world refers to a company's connection to a state. While this connection is typically that of a physical nature (warehouse in the Ohio, inventory in Ohio, etc.), nexus is not limited to a physical presence. There are many nexus triggers we won't delve into here and, more importantly, nexus is often determined by a combination of events rather than a single event.
If it is determined you have nexus in Ohio, the Ohio Department of Taxation has the legal right to require you to collect, file, and pay sales tax.
If you've determined you have nexus in Ohio, the second question involves a topic we call "materiality". In short, you'll want to ask yourself whether the amount of sales tax you are required to collect and remit to the Ohio Department of Taxation is enough to put you at an unacceptable level of penalty and interest risk. As everyone's level of risk tolerance is different, this is a question that can only be answered by you, the business owner.
Prior to selling taxable goods or offering taxable services in Ohio, a business that has established nexus within the state is required to register for an Vendor's License.What triggers nexus in Ohio?
Nexus is a complex topic that, depending on your situation, may require the in-depth knowledge of a qualified tax professional. That being said, there are a few common business events and situations that are known to trigger nexus in Ohio. The most common include the following:
- Opening an office in Ohio
- Storing inventory in a warehouse in Ohio
- Having remote employees located in Ohio
Businesses may register for an Ohio Vendor's License online by visiting the Ohio Department of Taxation and following the instructions provided.
At this time, Ohio does not allow businesses to register for a Vendor's License via paper application. You'll need to visit the Ohio Department of Taxation and complete your registration online.What information is required to register for a Ohio Vendor's License ?
When applying for a Ohio Vendor's License, there are a number of pieces of information that may be required. These include, but are likely not limited to:
- Business name
- Business entity type
- Description of business activities
- Date business activities began or will begin
- Business address and mailing address
- Business contact information
- The North American Industry Classification System (NAICS) code that best matches your business
- Federal Employer Identification Number (FEIN)
- Your name, Social Security Number (SSN), driver license number, personal address, and personal contact information of owner/sole proprietor
- List of business officers, partners, managing members, and/or trustees
- Employment information (date of hire, number of employees, payroll amounts, payroll agent’s PTIN, if applicable)
The cost to register for a Ohio Vendor's License is currently $25.Do I need a Federal EIN in order to register in Ohio?
The Ohio Department of Taxation requires businesses requesting a new Vendor's License to supply a valid Federal EIN number during the initial registration process. You can apply for an EIN number online by visiting the IRS website.Which Ohio governement agencies do I need to register with in order to get a new Vendor's License?
We recommend you contact the Ohio Department of Taxation to verify which government agencies you will be required to register with. Potential agencies include the following:
- Ohio Department of Revenue
- Ohio State Employment Agency
- Ohio State Department of Labor
- Ohio Local Tax Jurisdictions
Yes! Ohio Vendor's License registration is unique to the state of a business. The Ohio Department of Taxation requires all registered businesses to have current business owner name and contact information on file.