Are you thinking about starting a business in Florida? Does the tax system seem confusing to you? If so, you should contact a small business tax accountant in Hunters Creek, FL to simplify the complex Florida tax process.
Every retail sale, rental, and storage for use is taxable in Florida unless specifically exempted by the state. The sales tax rate is six percent for most items; however, other rates are applicable for certain items such as 6.95 percent on electricity and 4 percent on amusement machine receipts. Most counties in Florida also impose a local discretionary sales surtax. Your small business tax accountant in Hunters Creek, FL will provide you with more information about the exact rate on items.
Here, we will provide an overview of the sales tax procedure in Florida. After reading this guide, you will have a better idea of how to register, assess and pay taxes in Sunshine State.
Assessing Taxability of Goods and Services
Before you commence your business in Florida, the first thing you should do is to assess whether your products or services are taxable. Traditional physical goods like home appliances, furniture, vehicles, office supplies, and other similar items are taxed. However, you won’t have to pay any taxes in Florida for prescription medicine, groceries or gasoline.
Similarly, traditional services like pest control services, cable services, security services, and repair services are all taxed. You can contact your small business tax accountant in Hunters Creek, FL to know about the services that are taxed and exempted. Here is a table that lists some of the goods and services that are taxed and exempted in Florida.
|Products Sold on Amazon||Raw Materials|
|Motor Vehicles||Utilities and Fuel|
|Newspapers and Periodicals||Transportation Services|
|Tangible Media Property||Software – Downloaded|
|Janitorial Services||Custom Software – Delivered on Tangible Media|
|Software – Delivered on Tangible Media||Digital Products|
The above is a not an exhaustive list. You can find more information about taxed and exempted goods and services by contacting your small business tax accountant in Hunters Creek, FL.
Special tax considerations apply if you are selling goods through Fulfillment by Amazon (FBA) or other similar platforms. You have to pay taxes in case you have a sales tax nexus in the state. Nexus is a fancy word for having a significant physical presence. You are considered to have a nexus in Florida if the following conditions apply:
- Own, leased or rented a property from where goods are sold or services are provided
- An employee works in the state
- Repairs or modification of goods that are later sold at retail
- Short-term accommodation like a trailer or booth from where goods are sold
- Inventory is stored at one of the warehouse facilities in the state
Again, your small business tax accountant in Hunters Creek, FL will provide you with in-depth information about whether you will have to pay taxes for having a nexus in the state.
Register for a Seller Permit
In case you have determined that you have to pay taxes on goods and services, the next step should be to contact a small business tax accountant in Hunters Creek, FL for obtaining a seller permit. Without a seller permit, you cannot legally collect taxes on goods and services. So, obtaining a seller permit is essential if you want to legally establish and operate a business that deals with taxable items.
You can register for the sellers permit online by going to the Florida Department of Revenue website. Your small business tax accountant in Hunters Creek, FL will help you in filling the online form. Generally, you will need to provide the following information to register online.
- Legal name of the business
- Date of fiscal year end
- Owner name
- Owner’s Federal Employer Identification Number (FEIN)
- Owner’s Social Security Number (SSN)
- Owner’s address
- Physical address of the office
Your small business tax accountant in Hunters Creek, FL will help you determine the exact information required when registering for a permit. In case you don’t have internet access, you can also print and submit Florida Business Tax Application (Form DR-1).
You don’t have to pay any fees if you register online. However, if you decide to register through mail, you need to pay $5 to the Florida Department of Revenue. Additional fees may apply in certain situations. You should contact small business tax accountant in Hunters Creek, FL to know about the exact fees for registering through mail.
Once your application is approved, you will receive Florida Annual Resale Certificate for Sales Tax (Form DR-13) and Certificate of Registration (Form DR-11). You will receive these certificates through email if you have registered electronically. If you had registered through the mail, your certificates will be mailed to the address mentioned in the application.
Generally, it takes around three business days to receive the certificates online. If you have registered through themail, it will take additional days. Remember, you don’t have to renew the sales tax permit. Once you receive the permit, it will remain valid forever.
Obtain a Reseller Permit if Required
In case your business purchases or rents properties or services that will be sold or re-rent later, you should obtain a reseller’s permit called the Florida Annual Resale Certificate for Sales Tax.
With a reseller permit, you won’t have to pay sales taxes on the exempted goods. This prevents goods from being taxed multiple times before they reach the end customer. Your small business tax accountant in Hunters Creek, FL will provide you with information regarding the reseller permit.
If you later use the goods or services, you need to report and pay taxes and any additional surcharges. Fraudulent use of the certificate can result in criminal and civil penalties. You should contact your small business tax accountant in Hunters Creek, FL to know whether you need to register for a reseller permit.
Determine the Sales Tax Obligations
Once you have obtained the required tax permits, you can start selling goods and services in Florida. In order to avoid paying costly fines, you should determine the correct sales tax obligation. Your small business tax accountant in Hunters Creek, FL will help you calculate sales taxes due in each period.
When determining the sales taxes, you should consider the following three items.
- Retail Store Sales
- Sales Within the State
- Sales Out of State
Let’s unpack them one by one to better understand how to accurately calculate the sales tax due.
Retail Store Sales
All sales made from a store are taxed unless exempted. The goods and services are taxed at the local flat-rate.
An example will help you understand how the tax is charged.
Suppose, you own and manage a hardware store in Hunters Creek. Recall that building and construction materials are not tax exempt. So, you have to charge 6.5 percent taxes to the customers. This includes the Florida state tax rate of 6 percent, and the Orange County tax rate of 0.5 percent.Contact your small business tax accountant in Hunters Creek, FL to know more about the sales tax surcharges in different counties in Florida.
Sales Within the State
You also need to pay taxes on shipped goods to customers within the state. Remember that Florida levies sales tax on a destination-of-sale based method. Under this method, you have to charge the goods at the buyer’s ship-to location. Your small business tax accountant in Hunters Creek, FL will inform you about the exact tax rate when shipping goods within the state.
Let’s suppose that you have shipped goods to a customer located in Bradford County in Florida. The county charges a sales tax surcharge of 1 percent. In this case, you should collect sales tax at the rate of 7 percent. For more information about sales tax on goods that are sold within the state, you should consult with your small business tax accountant in Hunters Creek, FL.
Sales Outside the State
Most businesses don’t have to worry about collecting taxes for good shipped to customers located outside the state. However, if you have a nexus or a substantial physical presence in the state where the goods are shipped, you need collect taxes.
An example will help you to better understand this point. Suppose that a resident of Nevada finds your hardware store located in Florida through an online search query or yellow pages, and orders extension cords and a chainsaw. Since you don’t have a nexus located in the state you don’t have to charge sales tax to the customer. However, if you have an employee or any other type of business presence in a location, you need to collect sales tax from the customers.
What are Due Dates for Filing Taxes?
The state authority announces tax due dates every year. Generally, the tax due date falls between 16th and 20th of a month. Your small business tax accountant in Hunters Creek, FL will tell you about the exact days when the taxes are due in your circumstances.
Remember that you should file a tax return even if you don’t owe any sales tax during a particular month. Not submitting the returns will result in a penalty.
When you register for the sales tax permit, you will be assigned a frequency for filing the taxes. You can be required to submit the sales tax either annually, semi-annually, quarterly, or monthly. Typically, the following rule is followed when determining the frequency of filing the sales tax.
|Frequency||Average Monthly Sales Tax ($000)|
|Annually||$0.00 to $8.33|
|Semi-Annually||$8.34 to $41.66|
|Quarterly||$41.67 to $83.33|
|Monthly||$83.34 and up|
Whatever the filing frequency, the tax due date falls on the first day of the month. Your small business tax accountant in Hunters Creek, FL will inform you about the filing frequency and due dates for your business.
How to File Taxes in Florida?
You can file taxes in different ways in Florida. The common way to file the taxes is online. Your small business tax accountant in Hunters Creek, FL will provide you with detailed guidance on how to file taxes online.
You can also file taxes through themail. Form DR-15 is used to submit taxes to the Florida Department of Revenue.
Make sure that you file the taxes within the due date. If you don’t file taxes within the specified due date, you will have to pay a late penalty. A penalty will also be imposed for incorrect or incomplete information in the tax return file. The penalty amounts to 10 percent of the tax owed, but may not be less than $50. This minimum penalty will be imposed even if you don’t owe any taxes.
Apart from a fixed penalty, the state also charges a floating rate of interest in case of late payments or underpayments.
Suppose you owe $1,000 in state taxes. If you don’t file the taxes on time, you will have to pay a fine of $100, excluding any interest surcharges. In case you owe $400 taxes, you will have to pay a penalty of $50,since 10 percent of the taxable amount due in this case is less than the minimum fine.
While the penalties on late payments are high, the Florida State Department is also generous when it comes to timely payment of taxes. Business owners who file taxes online and within the due date are entitled to a 2.5 percent cash allowance, which may not exceed $30. This collection allowance is not applicable for owners who do not file taxes online.
For further information regarding sales tax, you should contact an experienced small business tax accountant in Hunters Creek, FL. A professional tax accountant will help you in properly filing the taxes without errors and within the due date. Also, a small business tax accountant in Hunters Creek, FL will help you find out ways to save thousands of dollars in taxes.