8/23/2021

Guide To Houston Small Business Tax

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We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Texas, and if so, how best to tackle the sales tax situation in the Lone Star State.

When calculating the sales tax for this purchase, Steve applies the 5% state tax rate for Louisiana, plus 4.6% for Shreveport’s city tax rate. At a total sales tax rate of 9.6%, the total cost is $383.60 ($33.60 sales tax). Out-of-state Sales. Louisiana businesses only need to pay sales tax on out-of-state sales if they have nexus in other. Be many new resources available for small businesses, as well as certain non-profits and other employers. This guide provides information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax. Get federal and state tax ID numbers. Houston District Office Resource Guide. Lender Match is a free online referral tool that connects small businesses with. The sales and use tax rate in Houston is 8.25%: 6.25% state tax, 1% city tax, and 1% transit authority tax. These low tax rates are typical for most businesses in Houston.

After reading this, you’ll know:

  • Do you or don’t you need to collect Texas sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Texas sales tax!
Schedule a time to look at your specific sales tax needs and learn about automation.

Do you Have Sales Tax Nexus in Texas?

Guide To Houston Small Business Tax Exemption

Good news! You only have to begin thinking about Texas sales tax if you have sales tax nexus in Texas.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Texas considers a seller to have sales tax nexus in the state if you have any of the following in the state:

  • An office or place of business
  • An employee present in the state
  • A place of distribution
  • A warehouse or storage space
  • A sales or sample room
  • Or another place where business is conducted

Here’s exactly what Texas has to say about sales tax nexus.

Do you Have Sales Tax Nexus in Texas if you Sell on FBA?

If you sell on Amazon FBA, you may fall under Texas’s nexus rules due to storing goods in an Amazon fulfillment center, and thus may have sales tax nexus in Texas. Texas is home to multiple Amazon Fulfillment Centers.

To determine whether or not you have items stored in an FBA warehouse in Texas, you can do one of two things:

Orwell Dev-c Review Summary. FIXED: There seems to be a problem with the default relative include paths not being used properly. I seriously need to fix that soon (this weekend probably, after vacation). Together with a few more things to do, I of course also need to post the source code somewhere. Orwell Dev-C is a Portable (IDE) Integrated Development Environment and Compiler for the C. Orwell Dev-C is a full-featured Integrated Development Environment (IDE) for the C/C programming language. It uses Mingw port of GCC (GNU Compiler Collection) as its compiler. It creates native Win32 executables, either console or GUI. Orwell Dev-C can also be used in combination with Cygwin. Orwell devc++ review. Orwell Dev-C is a full-featured Integrated Development Environment (IDE) for the C/C programming language. It uses Mingw port of GCC (GNU Compiler Collection) as its compiler. It creates native.

  1. Login to Amazon Seller Central and pull your inventory report
  2. Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature

You may find that your inventory is stored in one or more of Texas’s Amazon fulfillment centers in this list:

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the United States.

Do you have economic nexus in Texas?

Texas economic nexus laws don’t take effect until October 1, 2019, but it’s never too soon to begin planning and preparing if you’ll need to register for a sales tax permit. Once this law takes effect, remote sellers with Texas revenues above $500,000 are required to register for a sales tax permit, collect sales tax on sales that ship to Texas, and remit the sales tax to the state. Read more here about economic nexus thresholds in every state and when their laws take effect.

Is What You’re Selling Even Taxable?

You’ve probably read this far because you realized you have sales tax nexus in Texas. Your next step is to determine if what you’re selling is even taxable.

Services in Texas are sometimes taxable. Charge sales tax on services in Texas if you provide:

  • Amusement services
  • Cable and Satellite television service
  • Construction services if you separately charge for materials
  • Credit reporting services
  • Data processing services
  • Debt collection services
  • Information services
  • Internet access services (though the first $25 per account, per month is tax exempt.)
  • Motor vehicle parking and storage services
  • Nonresidential real property repair, restoration or remodeling
  • Personal property repair, restoration or remodeling services
  • Personal services
  • Real property services
  • Security services
  • Taxable labor (included labor used in the process of making tangible personal property)
  • Telecommunications services
  • Telephone answering services
  • Utility transmission and distribution services

In general, other services not mentioned here are not taxable in Texas. That said, this is always subject to change. So check with the Texas Comptroller if you think you may be selling taxable services. Here’s a current list of services taxable in Texas.

Tangible products are taxable in Texas. Charge sales tax to buyers if you sell tangible goods.

If you have sales tax nexus in Texas and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Texas

Sellers with sales tax nexus in Texas must apply for a Texas sales tax permit.

Don’t skip this step! Texas considers it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Texas.

Schedule a time to look at your specific sales tax needs and learn about automation.

How to Collect Sales Tax in Texas

So you’ve determined that you have sales tax nexus in Texas and what you’re selling is taxable. And you’re all set and registered for your Texas sales tax permit(s).

The next step is to determine how much sales tax to collect.

The sales tax rate you collect in Texas depends on whether you are based in Texas or out-of-state.

How to Collect Sales Tax in Texas if You are Based in Texas

Texas is an origin-based sales tax state. So if you live in Texas, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located.

You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

Example: You live and run your business in Plano, TX, in the 75023 zip code. Your sales tax rate is a total of the following percentages: Texas: 6.25%, Plano: 1%, and the district: 1%, for a total of 8.25%. If you live in Texas, you would charge all of your Texas customers, no matter where in the state they live, that 8.25% sales tax rate.

If you have more than one location in Texas, then you would base the sales tax rate you charge on the point of origin of your sale.

How to Collect Sales Tax in Texas if you are Not Based in Texas

This is where things get trickier for online sellers. Texas wants sellers who made a sale into Texas from outside the state to charge sales tax based on the destination of the item (i.e. the buyer’s ship to address.)

Here’s what they have to say about that: “If a seller receives an order at a place of business located outside of Texas, but delivery or shipment is made to a customer in Texas from a location within the state that is not a place of business (such as a warehouse or distribution center), the seller must collect use tax for the city, county, special purpose district or transit authority where the product is delivered if the seller is engaged in business in the jurisdiction.” (Source: Texas Sales and Use Tax Bulletin, p. 11).

Example: You live in Arkansas, but have sales tax nexus in Texas due to having products stored in the Amazon fulfillment center in Dallas, TX. If you make a sale to a buyer in Round Rock, Texas (78665 zip code) then you would charge sales tax based on the 8.25% sales tax rate in the buyer’s location, Round Rock.

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What are the Amazon sales tax settings for Texas?

If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your Texas sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.

If you are a…State taxCounty taxCity taxDistrict taxCustom rateIs shipping taxable?Is gift wrapping taxable?
Seller living in TexasXXXXN/AYesYes
Seller living outside of TexasXXXXN/AYesYes

Should you Collect Sales Tax on Shipping Charges in Texas

Shipping charges are generally taxable in Texas as long as the goods you are selling are also taxable.

Read a full explanation of sales tax on shipping in Texas here.

When are Texas Sales Tax Returns Due?

When you file and pay Texas sales tax depends on two things: your state-assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Texas?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Texas, you will be required to file and remit sales tax either monthly, quarterly, or annually.

How often you are required to file sales tax in Texas follows this general rule:

Texas sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

Guide to houston small business tax relief

2020 Texas Quarterly Sales Tax Filing Due Dates

2020 Texas Annual Sales Tax Filing Due Dates

Click here for more info on Texas sales tax filing due dates.

How to File Sales Tax in Texas

When it comes time to file sales tax in Texas you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment

This video will walk you through manually filing your Texas sales tax return using your TaxJar report:

How to File and Pay Sales Tax in Texas**

You have two options for filing and paying your Texas sales tax:

  • File online - File online at the “TxComptroller eSystems” site. You can remit your payment through their online system. Click here for a step-by-step guide to filing your Texas sales tax returns.
  • File by mail - You can also download a Texas Sales and Use tax return here.

You’ll mail your return to:

Comptroller of Public AccountsP.O. Box 149355Austin, TX 78714-9355

Keep in mind that if you made $10,000 or more in sales tax payments to Texas in the preceding fiscal year, you are required to file and pay online.

Other Facts You Should Know about Texas Sales Tax Filing

Business

There are a few more things you should know about sales tax in Texas:

Penalties:

According to the Texas Comptroller:

“The law imposes a $50 late filing penalty on every report filed after the due date, even if no tax was due for the period or the report was eventually filed.” Source.

Guide To Houston Small Business Tax Credit

They also state:

“If you fail to file a required sales tax report, the Comptroller’s office will send you an estimated billing, with instructions to file a report providing your actual sales data for the estimated period. Please be aware that failure to file or pay a sales tax report may result in collection actions, including, but not limited to, additional late filing penalties, liens, and criminal charges.”

“Zero returns”:

Texas requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Failing to file will result in a fine of $50 per filing missed.

Guide To Houston Small Business Tax Relief

Discounts:

Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Texas, as long as the sales tax is paid on time, a discount is available equal to 0.5% of tax due plus 1.25% of the amount of any prepaid tax you may have paid.

Texas Sales Tax Holidays

Here are the current Texas sales tax holidays:

Check here for more information about Texas sales tax holidays including how to handle sales tax holidays as an online seller.

And that’s it. You’ve mastered Texas sales tax filing! Now that sales tax is out of the way, you can get back to what you do best — running your business.

Guide To Houston Small Business Taxes

Texas Sales Tax Resources

For more about Texas sales tax, check out the Texas section of the TaxJar blog.