Virginia Sales Tax Guide
Chapter 3: Getting registered to collect Virginia sales tax
The first step toward proper management of Virginia sales tax involves getting registered with the Virginia 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 Virginia 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 Virginia?
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 Virginia, inventory in Virginia, 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 Virginia, the Virginia 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 Virginia, 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 Virginia 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 Virginia, a business that has established nexus within the state is required to register for an Certificate of Registration.What triggers nexus in Virginia?
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 Virginia. The most common include the following:
- Opening an office in Virginia
- Storing inventory in a warehouse in Virginia
- Having remote employees located in Virginia
Businesses may register for an Virginia Certificate of Registration online by visiting the Virginia Department of Taxation and following the instructions provided.
It is also possible to get registered for a Certificate of Registration by completing and mailing in a Business Registration Form (R-1), but this approach is not recommended. Form based registration is being phased out in favor of online registration. It’s fast, free, and more reliable than mailing in a completed paper form.What information is required to register for a Virginia Certificate of Registration ?
When applying for a Virginia Certificate of Registration, 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 Virginia Certificate of Registration is currently $0.Do I need a Federal EIN in order to register in Virginia?
The Virginia Department of Taxation requires businesses requesting a new Certificate of Registration 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 Virginia governement agencies do I need to register with in order to get a new Certificate of Registration?
We recommend you contact the Virginia Department of Taxation to verify which government agencies you will be required to register with. Potential agencies include the following:
- Virginia Department of Revenue
- Virginia State Employment Agency
- Virginia State Department of Labor
- Virginia Local Tax Jurisdictions
Yes! Virginia Certificate of Registration registration is unique to the state of a business. The Virginia Department of Taxation requires all registered businesses to have current business owner name and contact information on file.