# Registering, collecting and filing sales tax

> Register, charge, document, book and remit, worked on Northwind's September: $760 collected, one resale certificate, and the October payment.

Source: https://lopifi.com/learn/how-to-register-collect-and-file-sales-tax
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How do I register for, collect and file sales tax?** Register, charge, document, book and remit, worked on Northwind's September: $760 collected, one resale certificate, and the October payment.

Nexus decides *whether* a seller collects in a state. Then come the mechanics: register, charge the right rate on the right sales, keep the paper for the sales you didn't tax, and file and pay on the schedule the state gives you. Northwind did all of it in September: $760 collected on one sale, none on another, and a liability of $760 carried into October.

1. **Register.** Get a sales tax permit from the state's revenue department before collecting there: at once where you have physical presence, by the state's deadline after crossing its economic threshold. The state assigns a filing frequency.
2. **Charge the right rate.** Charge the combined rate for where the sale is sourced, state plus any local rates. Most states source to the buyer's location. [Home-rule cities](https://lopifi.com/md/glossary/home-rule-sales-tax) run their own.
3. **Document what you didn't tax.** Keep an [exemption or resale certificate](https://lopifi.com/md/glossary/exemption-certificate) for every sale you don't tax. It's what proves to an auditor why no tax was charged.
4. **Book it as a liability.** Credit what you collect to [sales tax payable](https://lopifi.com/md/glossary/sales-tax-payable), a liability. It was never revenue.
5. **File and remit.** File by the state's deadline for each period — monthly, quarterly or annually, as assigned — and pay what was collected. Some states let a timely filer keep a [small discount](https://lopifi.com/md/glossary/vendor-s-compensation).

Registering through remitting, in order.

*[Figure: sales tax stack]*

JE-5's 8%: one combined rate, split by jurisdiction. Northwind's rate is read off its own entry; the split shown is the figure's.

**Northwind — One sale taxed, one not.** The walk-in customer paid $10,260: $9,500 for the goods and $760 of tax. The trade customer's $22,000 invoice (JE-7) carried no tax at all, because the customer buys to resell and gave Northwind a resale certificate. That certificate, on file, is the whole reason the second sale is right.

*[Figure: exemption certificate]*

The $22,000 trade sale, untaxed because the certificate is on file.

## Remitting, in the books

When Northwind files its September return, the payment clears the liability. No revenue and no expense: the tax was the state's money from the moment it was collected.

**Wrong:** Revenue $10,260.

**Right:** Revenue $9,500; sales tax payable $760.

Recording the whole $10,260 as revenue overstates the month by the tax and leaves nothing on the balance sheet for the state's $760.

> **Missed a state?.** A company that finds it should have been collecting somewhere can usually come forward through a [voluntary disclosure agreement](https://lopifi.com/md/glossary/voluntary-disclosure-agreement), which limits the lookback and typically waives penalties.

> **Sales tax is the state's money in your bank account: register before you collect, credit it to a liability, and pay it over on the state's schedule.**

In this lesson: whether software sold as a service is taxable, state by state. Nexus itself is [the Wayfair lesson](https://lopifi.com/md/learn/sales-tax-nexus-after-wayfair).

## Pages in this lesson

- [Is SaaS taxable? State by state](https://lopifi.com/md/learn/how-to-register-collect-and-file-sales-tax/is-saas-taxable) — 4 min. Is SaaS subject to sales tax?

## Where this lesson's rules come from

- [South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), syllabus](https://www.supremecourt.gov/opinions/17pdf/585us1r58_pok0.pdf) (PDF) — The Supreme Court ends the physical presence rule for sales tax collection (decided June 21, 2018) (tax)

## Read further

- https://lopifi.com/md/journal-entries/sales-tax-collected
- https://lopifi.com/md/startups/how-sales-tax-is-calculated
- https://lopifi.com/md/startups/registering-in-a-new-state
- https://lopifi.com/md/startups/sales-tax-nexus-for-startups
- https://lopifi.com/md/accounting/sales-tax-nexus
- https://lopifi.com/md/accounting/voluntary-disclosure-agreement
- https://lopifi.com/md/tools/tax

- **Track:** [Compliance & tax](https://lopifi.com/md/learn/compliance)
- **Lesson:** Lesson 7 of 10 — 10 min
- **Terms taught:** [Sales tax payable](https://lopifi.com/md/glossary/sales-tax-payable), [Exemption certificate](https://lopifi.com/md/glossary/exemption-certificate), [Home-rule sales tax](https://lopifi.com/md/glossary/home-rule-sales-tax), [Vendor's compensation](https://lopifi.com/md/glossary/vendor-s-compensation), [Voluntary disclosure agreement](https://lopifi.com/md/glossary/voluntary-disclosure-agreement)
- **Previous:** [Marketplaces collect for you, Compliance · Lesson 6](https://lopifi.com/md/learn/sales-tax-nexus-after-wayfair/marketplace-facilitators)
- **Next:** [Is SaaS taxable? State by state](https://lopifi.com/md/learn/how-to-register-collect-and-file-sales-tax/is-saas-taxable)
- **The course:** https://lopifi.com/md/learn