How to Add 6 Percent Sales Tax

As a business owner, you may have to calculate, charge and submit sales taxes on the products and services that you sell. Not all states or municipalities charge sales taxes and not all purchases are subject to sales tax, so it is important to understand the sales tax laws that apply to your business in the area or areas where you sell to consumers.

How to Calculate Tax on an Item

Calculating sales tax on a product or service is straightforward: Simply multiply the cost of the product or service by the tax rate. For example, if you operate your business in a state with a 6% sales tax and you sell chairs for $100 each, you would multiply $100 by 6%, which equals $6, the total amount of sales tax. Add the sales tax to the sale price to bring the total cost of one chair to $106.

While it is possible to calculate sales tax manually or by using a calculator, most point-of-sale (POS) software packages can make these calculations for you at the register or via a mobile app. Still, it is a good idea to provide calculators and receipt pads to your employees for use in case your POS system or mobile connection goes down. Employees should also be informed of tax rates for the products and services you sell.

If you are engaged in e-commerce, many commercial storefront programs incorporate a feature that acts as a sales tax calculator by ZIP code. This feature allows your online storefront to determine, calculate and charge the appropriate amount of sales tax for the area to which you will be shipping your customer's purchase.

Understanding Sales Tax Requirements

Understanding sales tax requirements can be a challenge for startup businesses, particularly if you live in an area where there are multiple sales tax requirements from different levels of government. For example, both the state and city you do business in may charge their own separate sales taxes.

Another thing to consider is that not all items are subject to sales tax. For example, some states tax magazines and newspapers sold at newsstands, while others do not. States may also tax necessary items, such as food, at a significantly lower rate than other goods.

Information about sales tax rates can be obtained through your state and local departments of revenue. These are the tax collecting agencies for your area and will have the most up-to-date information on tax requirements. You can also purchase POS software that is automatically programmed and updated with the most recent tax codes for the area where you do business. This software saves you the hassle of trying to figure out whether you need to add tax to a purchase.

Collecting and Submitting Sales Tax

As you obtain licenses and permits for your business, one thing you'll want to do is register for a sales tax permit. This process is usually straightforward and can often be accomplished online. Usually, you'll complete a form on a state or local revenue department's website. You'll receive documentation as well as an account number along with instructions for submitting sales tax payments to the agency.

Special Sales Tax Circumstances

Depending on the nature of your business, you may encounter some circumstances in which a customer is not obligated to pay sales tax on the products and services you sell. For example, if you sell items at wholesale to other businesses, these clients can provide you with a resale certificate that releases you from an obligation to collect sales tax. Keep track of these certificates because you may need them if a revenue agency audits your sales to determine whether you are appropriately collecting sales tax.

Some types of businesses such as nonprofit agencies and schools may also be exempt from having to pay sales tax. As with companies that purchase at wholesale, it is important to collect a tax exemption certificate from these organizations so that you can show tax authorities that you were justified in not collecting taxes.