Do you run a business in the United States and are considering branching out into other states? If so, you may want to brush up on the concept of a “use tax” to determine how it may affect you. Understanding what it is, who collects it and when it’s due will help you better manage your business’ finances.
What Is a Use Tax?
A use tax is essentially a tax paid on goods or services that you have purchased in a state different than the one in which you do business. So essentially, you are being taxed on the goods or services that are not physically located in the state in which you do business. This applies to items purchased outside the state like from an online retailer.
Who Collects Use Tax?
Use tax is usually collected by the state in which your business operates, though this can vary based on the state’s laws. In some cases, it’s collected by the state in which the goods or services were purchased.
When Is Use Tax Due?
The exact date that use tax is due will vary based on the individual state’s regulations. In general, most states require the tax to be paid either semi-annually, quarterly or monthly, depending on the total amount paid for the goods or services. Be sure to check with your local state to determine the use tax due date.
Conclusion
Use tax can be an important component of your business’ financials. Understanding the concept of use tax, who collects it and when it’s due can help you better manage your business’ finances. Be sure to check with your local state to determine the use tax due date and don’t forget to factor it into your budgeting plans!