Does my business need to collect sales tax?
It depends on what you sell, where you sell it, and what the state considers taxable. The rules vary by state, but since most of our clients are in Florida, that’s a good place to start.
If you sell tangible goods (physical products), you almost certainly need to collect Florida sales tax. The state rate is 6%, and most counties add a discretionary surtax on top of that. Hillsborough County adds 1.5%, making the combined rate 7.5%. You’ll need to know the correct rate for the county where the sale takes place, which isn’t always where your business is located.
Services are where it gets less straightforward. Florida does not tax most services. If you’re a consultant, accountant, marketing agency, or law firm, you generally don’t collect sales tax on your fees. But there are notable exceptions. Commercial cleaning, pest control, nonresidential building maintenance, and security services are all taxable in Florida. Residential cleaning is not. The distinctions can feel arbitrary, but getting them wrong creates real liability.
If you sell products online or ship to customers in other states, the picture expands. Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can require you to collect sales tax even without a physical presence. Most states set thresholds around $100,000 in sales or 200 transactions in a calendar year. Cross that line and you’re required to register, collect, and remit in that state. E-commerce sellers and businesses with out-of-state customers need to pay close attention to this.
Before collecting any sales tax, you need to register with the Florida Department of Revenue and get a sales tax certificate. Collecting without being registered is illegal. So is collecting and failing to remit. If you should be collecting but aren’t, the state can hold you personally responsible for the unpaid tax plus penalties and interest. That liability doesn’t fall on your customers retroactively. It falls on you.
The tricky part for many business owners is figuring out where they fall. A roofing contractor installing materials handles sales tax differently than a retailer selling those same materials over the counter. A restaurant charges sales tax on prepared food, but a grocery store doesn’t on most items. Context matters, and the Florida Department of Revenue guidance is dense enough that the edge cases are easy to miss.
Getting sales tax management right from the beginning is far cheaper than fixing mistakes after the fact. If you’re unsure whether your products or services are taxable, ask before you start selling rather than finding out during an audit. And once you are collecting, make sure your small business bookkeeping tracks sales tax separately so filing each period is straightforward instead of a scramble to figure out what you owe.
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