How to Get Ohio Sales Tax Permit | A Comprehensive Guide


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Ohio Sales Tax Permit

Have you ever wondered what a sales tax permit is in Ohio? If you don’t, then we will guide you through it. In Ohio, a sales tax permit, also known as a seller’s permit, is a legal document that allows businesses, specifically Ohio LLC, to collect and remit sales tax to the Ohio government. This permit ensures businesses operate legally and have the necessary permissions to conduct sales within a particular state. Ohio has its own rules and regulations surrounding sales tax permits. Business owners must familiarize themselves with the requirements and processes to comply with the law.

In this comprehensive guide, Webinarcare Editorial Team will walk you through everything you need to know about obtaining and maintaining Ohio Sales Tax Permit. From understanding the basics of sales tax to the intricacies of the application process, we have got you covered. You must be guided by all the factors gathered in this article.

What is a Sales Tax Permit?

A sales tax permit is Ohio-issued license that allows businesses to collect and remit sales tax on the goods and services they sell. This permit ensures Ohio businesses operate legally and have the necessary permissions to conduct sales within a particular state. In Ohio, a sales tax permit is required for businesses that sell taxable goods or services and are required to collect sales tax from their customers.

Who Needs a Sales Tax Permit?

Not all businesses need a sales tax permit. Typically, businesses that sell tangible personal property or taxable services to customers within Ohio require a sales tax permit. This includes brick-and-mortar stores, online retailers, and service providers. Ohio may also require sales tax permits for businesses that sell certain types of products or services, such as alcohol or tobacco. If you plan to start a bakery business in Ohio, you typically need a sales tax permit to collect and remit sales tax on the items you sell.

If your business operates in multiple states or forms a foreign LLC in Ohio, you may need to obtain a sales tax permit for each state with a sales tax nexus. A sales tax nexus is a connection or presence a business has within a state that requires them to collect and remit sales tax. Factors that can create a nexus include the following:

  • Physical location
  • Employees
  • Inventory within a state

Obtaining a sales tax permit in Ohio is not just about complying with regulations, but about seizing the opportunity to grow and thrive in the market. To start an LLC must be a gateway to establish a legitimate business presence and to build trust with customers. Embrace this essential step, for it paves the path towards success and prosperity.

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How to Get a Sales Tax Permit in Ohio

The process for obtaining a sales tax permit varies from state to state. Generally, Ohio businesses must apply through the Ohio Department of Taxation. The following steps provide an overview of the application process:

Step 1: Determine If You Need a Sales Tax Permit 

Before applying, determine if your Ohio business needs a sales tax permit based on the goods or services you sell and where you operate.

Most Ohio businesses that sell tangible goods or services must have a sales tax permit. This includes:

  • Retailers – businesses that sell goods directly to consumers, such as clothing stores, grocery stores, and electronics stores.
  • Service Providers – businesses that provide services, such as hair salons, auto repair shops, and landscaping companies.
  • Wholesalers – businesses that sell goods to other businesses, such as distributors and manufacturers.
  • Online Sellers – businesses that sell goods or services online, including Ohio E-commerce and online marketplaces.

Step 2: Register Your Ohio Business

Register your business in Ohio if you still need to. This may involve obtaining an Employer Identification Number (EIN) in Ohio from the Internal Revenue Service and registering your business name with the Ohio Secretary of State. 

Your Ohio business name should be unique, memorable, and reflective of your products or services. There is a complete guide on Ohio Business Name Search for a proper Ohio business name. You can also check the availability of your desired business name by searching the Ohio Secretary of State Business Search‘s website.

In obtaining an EIN, it can be done through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Complete the registration for a legal Ohio business if you plan to sell tangible goods. 

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

Step 3: Gather The Necessary Information

The next step is to collect the required information for the Ohio sales tax permit application. To obtain a sales tax permit in Ohio, you will need to gather the following necessary information:

  1. Business Details: Provide the legal name, mailing address, and contact information of your business, including your Ohio DBA (Doing Business As) names.
  2. Entity Type: Indicate whether your business is a sole proprietorship, partnership, corporation, LLC, or legal entity.
  3. EIN/SSN: Have your Employer Identification Number (EIN) or Social Security Number (SSN) ready. This identification is required to associate the sales tax permit with your business.
  4. Purpose of Permit: Explain the nature of your business activities, such as retail sales, wholesale, manufacturing, or service, to determine the appropriate sales tax category.
  5. Product/Service Description: Provide a brief description of the goods or services your business offers, including any unique details that may impact the sales tax requirements.
  6. Nexus Information: Identify if your business has a physical presence or nexus in Ohio, such as a brick-and-mortar location, employees, or inventory storage.
  7. Estimated Sales: Estimate your expected monthly or annual sales volume in Ohio to determine the appropriate tax registration and reporting requirements.
  8. Previous Registration: If you are already registered for sales tax in another state, provide details to determine if any reciprocal agreements or exemptions apply.
  9. Supporting Documents: Some states may require additional documentation, such as a copy of your business license, federal tax returns, or a certificate of authority.
  10. Fee Payment: Be prepared to pay the required fee for obtaining a sales tax permit in Ohio.

It’s important to note the exact requirements and processes in Ohio. It is recommended to visit the official website of the Ohio Department of Taxation or consult with a tax professional for accurate and up-to-date information.

Step 4: Complete The Application

Fill out the sales tax permit application form for Ohio, either online or by paper. Be prepared to answer questions about your business operations, products, and services. You can register your Ohio sales tax permit in Ohio Business Gateway.

Step 5: Pay Any Required Fees

In Ohio, the state permit may charge a fee for obtaining a sales tax permit. Be prepared to pay this fee when submitting your application. Usually, it costs $25 in state (free out-of-state). 

Step 6: Submit The Application

Submit your completed application, along with the required fee of $25 in state (free out-of-state), to the Ohio Department of Taxation.

Step 7: Receive Your Permit

Once your application is approved, you will receive your sales tax permit. This may be a physical document or an electronic certificate you can print. 

How to Maintain a Sales Tax Permit

After obtaining a sales tax permit, Ohio businesses must maintain compliance with Ohio sales tax laws. This typically involves the following steps:

  • Collect Sales Tax: Collect sales tax from customers on taxable goods and services. Be sure to charge the correct sales tax rate based on your and your customer’s locations. The sales tax rate in Ohio is 5.75%. 
  • Keep Accurate Records: Maintained detailed records of all sales transactions, including the amount of sales tax collected. This information will be required when filing your sales tax returns. Hire a certified public accountant (CPA) to keep track of records. 
  • File Sales Tax Returns: File sales tax returns with Ohio, typically monthly, quarterly, or annually, depending on your sales volume and Ohio requirements. Be sure to remit the sales tax collected during the reporting period.
  • Renew your Permit: Ohio requires businesses to renew their sales tax permits periodically. Know your state’s renewal requirements and complete the necessary steps to maintain your permit.

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Penalties for Non-Compliance

Failure to obtain or maintain a sales tax permit can seriously affect a business. Penalties for non-compliance can include fines, penalties, interest charges, and even the revocation of your business license. Additionally, Ohio businesses that fail to collect and remit the Ohio sales tax may be held personally liable for the unpaid taxes.

Do I Need a Sales Tax Permit If I Only Sell Online?

You likely need a sales tax permit if you sell taxable goods or services online and have a sales tax nexus in Ohio. To have a Home-Based Business in Ohio, you must still file and maintain a sales tax permit. 

How Long Does Obtaining a Sales Tax Permit Take?

The processing time for sales tax permit applications takes time. In Ohio, they may issue permits within a few days, while others may take several weeks. Be sure to apply well in advance of when you plan to start selling taxable goods or services.

Can I Have Multiple Sales Tax Permits?

Businesses that operate in multiple states or sell different types of products may need multiple sales tax permits. Be sure to research the specific requirements for each state and product type. Having a foreign LLC is not quite easy since you still need to hire a Statutory Agent, file for the Articles of Organization of the state you wish to operate your business, and also, you need to have multiple sales tax permits. 

How Much Does a Sales Tax Permit Cost?

The costs and requirements for obtaining a sales tax permit vary depending on the state. To find accurate information about the cost of a sales tax permit in Ohio, you can visit the Ohio Department of Taxation’s website or consult with a tax professional or accountant familiar with your state’s regulations. They can provide the most up-to-date information on the costs and requirements for obtaining a sales tax permit in Ohio.

FAQs

Do I need a sales tax permit in Ohio?
Yes, if you make sales in Ohio, you need a sales tax permit.
How do I apply for a sales tax permit in Ohio?
You can apply online through the Ohio Business Gateway or by paper application through the Ohio Department of Taxation.
Is there a fee for obtaining a sales tax permit in Ohio?
No, there is no fee for obtaining a sales tax permit in Ohio.
How long does it take to obtain a sales tax permit in Ohio?
Generally, it takes about two weeks for the Ohio Department of Taxation to process a sales tax permit application.
Can I begin making sales before I receive my sales tax permit in Ohio?
No, you cannot legally make sales without a sales tax permit in Ohio.
Do I need a separate sales tax permit for each location in Ohio?
Yes, you need a separate sales tax permit for each physical location where you make sales in Ohio.
Can I use my out-of-state sales tax permit in Ohio?
No, you need a separate Ohio sales tax permit to make sales in Ohio.
What items are subject to sales tax in Ohio?
Generally, tangible personal property and taxable services are subject to sales tax in Ohio.
What is the current sales tax rate in Ohio?
The current statewide sales tax rate in Ohio is 5.75%.
Are there any local sales tax rates in Ohio?
Yes, there are additional local sales tax rates in Ohio that vary by county and municipality.
How often do I need to file a sales tax return in Ohio?
You need to file a sales tax return in Ohio either monthly, quarterly, or annually, depending on your total tax liability.
Can I file my sales tax return online in Ohio?
Yes, you can file your sales tax return online through the Ohio Business Gateway.
What are the consequences of not obtaining a sales tax permit in Ohio?
If you do not obtain a sales tax permit in Ohio, you may face penalties and fines and may be required to pay back taxes.
Are there any exemptions to the Ohio sales tax?
Yes, there are certain exemptions for certain types of sales or purchasers in Ohio.
What documentation do I need to apply for a sales tax permit in Ohio?
Generally, you will need to provide your business information, federal business tax ID number, and possibly proof of sales tax registration in other states.
Can I cancel my sales tax permit in Ohio if I no longer make sales in Ohio?
Yes, you can cancel your Ohio sales tax permit by notifying the Ohio Department of Taxation.
Do I need to collect sales tax for sales made to other Ohio businesses?
Yes, Ohio businesses are subject to sales tax.
Do I need to collect sales tax for sales made to out-of-state customers?
If you ship products to customers outside of Ohio, you generally do not need to collect Ohio state sales tax.
Can I charge a higher rate for sales tax than the official Ohio rate?
No, you must charge the official Ohio sales tax rate for both state and local taxes.
What if I exceed the sales tax permit limit in Ohio?
If you exceed the limit for your sales tax permit, you will need to register for a higher level of sales tax permit with the Ohio Department of Taxation.
Can I display my sales tax permit in my place of business in Ohio?
Yes, it is recommended to display your sales tax permit at your place of business in Ohio.
What if I change my business name or address after receiving my sales tax permit in Ohio?
You will need to update your sales tax permit information with the Ohio Department of Taxation.
Can I grant tax-exempt status to another Ohio business?
No, tax exemptions are determined by state law, not by other businesses.
Do I need to charge tax for sales made to schools or churches in Ohio?
Generally, sales to schools or churches are taxable in Ohio.
Does Ohio have a “use tax”?
Yes, Ohio requires individuals and businesses to pay use tax on purchases made outside of Ohio that would have otherwise been subject to Ohio sales tax if purchased in Ohio.
Can I advertise that I do not charge sales tax in Ohio?
No, it is illegal to advertise that you do not charge sales tax in Ohio if you are not exempt under Ohio law.
What happens if I fail to file a sales tax return in Ohio?
If you fail to file a sales tax return in Ohio, you may face penalties and fines and may be required to pay back taxes.
Do I need to keep records of my taxable sales in Ohio?
Yes, you are required to keep accurate and complete records of your taxable sales in Ohio.
What are the rules around collecting sales tax for Ohio online sellers?
Online sellers may be required to collect Ohio sales tax if they make sales to Ohio customers or meet other eligibility criteria-defined by Ohio’s economic nexus rules.
What documentation is required for verification of tax-exempt sales in Ohio?
Normally, Ohio requires customers to provide certificates of exemption and sellers need to maintain proper documentation on these sales.

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Conclusion

Obtaining and maintaining a sales tax permit is crucial to running a compliant and successful business. By understanding the requirements and processes in Ohio, you can ensure that your business collects and remits sales tax correctly and avoids any penalties for non-compliance. Consulting with a tax professional or Ohio attorney is recommended to ensure that your Ohio business meets all necessary sales tax requirements.

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