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The Sales Tax Registration Process

  • Nov 13, 2015 | Ryan O'Donnell

It's an election year so a day doesn't go by that we aren't reminded of the fact that small businesses drive the American economy. From bike shops to doughnut shops, the American machine is driven by individuals who get up every day, brew a strong pot of coffee, and get to work.

But, before the first product is purchased or service is rendered, every business operating in a state that collects sales tax must register with the state to collect said sales tax. Compared to building a brand, fending off competition, and winning customers, this is one of the easiest steps encountered when starting a business. Let's take a look at what sales tax registration is comprised of.

One Size Does Not Fit All

First, it's important to remember the registration process is different in every state. That's the thing about sales tax, every state (and some local) tax jurisdictions have their own way of managing it. Heck, some states don't even refer to sales tax as "sales tax." In Arizona, for instance, sales tax is known as transactional privilege tax.

If you're selling to customers in multiple states and you have nexus in those states, you'll want to carve out enough time to review the registration process for each location.

Online or Off?

In keeping with the "one size does not fit all" theme, every state offers their own options for registration. However, it is recommended that registration be done online. It's faster and there is less chance of paperwork getting misplaced, lost, or compromised.

In some states, like Florida, online registration is free while paper registration has a cost attached.

Be Prepared

Before you begin the registration process, you should get all the necessary materials together so you don't have to press pause in the middle. You will need at least the following items:

  • Name of your businesses
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • 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)

If you choose to set up payment during the registration process, you will also need to have your banking information (routing number and account information).

Registration is typically completed within a week of application.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Ryan O'Donnell
Avalara Author Ryan O'Donnell