Business Licenses and Permits

Many states require vendors to pay a Sales Tax or a Use Tax for retail sales, leases of tangible property and services subject to taxation. The Use Tax is complementary to the Sales Tax and it is usually applied to out of state vendors. However, some out of state vendors are required to pay the Sales Tax and are not subject to Use Tax. As a vendor it is important to know when to pay the Sales Tax or the Use Tax. For example, some states require vendors to pay the Use Tax on tangible property purchases made in a state which does not impose Sales Tax or on tangible property purchases made through the Internet. For transient vendors (vendors who sell items for a limited time and have no permanent place of business) some states will wave the requirement to pay the Sales Tax, even though they require it for established vendors.

 Sales Tax and Use Tax requirements vary from state to state and vendors transacting any business in a certain state should contact the Sales Tax/Use Tax issuing departments and make sure they are in compliance with the state’s requirements.

 Adriana Dinu, Business License Research Analyst, Corporation Service Company