As a business, do I need to collect Florida sales tax?
Businesses are required to collect sales tax in Florida if they have a sales tax nexus in the state. This includes having a physical presence or reaching a specific sales level, which establishes an economic nexus. This is why understanding Florida state sales tax obligations is crucial for compliance.
Do I have a physical nexus in Florida?
A physical nexus in the state of Florida is established if your business has a physical presence in the state. Following are examples of physical presence that can trigger a physical nexus in the state of Florida:
- Contractors (customer facing roles): "Contractors" are usually considered independent entities or individuals. They operate their own businesses and are not typically under the direct control of the hiring company. The presence of contractors engaged in customer-facing roles, such as marketing, sales, support, or servicing, usually triggers a physical nexus in the state.
- Employees (customer facing roles): In the context of establishing a physical nexus, "employees" refer to individuals who work for your business and are physically present in the respective state. Employees engaged in customer-facing roles, such as marketing, sales, support, or servicing, usually trigger a physical nexus in this state.
- Office: An "office" in the context of establishing a physical nexus refers to a physical location or workspace that a business maintains within the respective state. This could include a dedicated facility where administrative tasks are carried out, meetings are conducted, or business operations are managed.
- Warehouse: A "warehouse" in the context of establishing a physical nexus refers to a physical facility used for storing goods, inventory, or products within the respective state. Businesses may utilize warehouses for various purposes, such as storage, distribution, or fulfillment of orders.
How do I know if I have an economic nexus in Florida?
An economic nexus in Florida is determined by your sales volume. If the annual sales of your enterprise exceed the given threshold in Florida, you must register for an Florida sales tax permit, collect tax on sales shipped to Florida, and remit that sales tax to the state revenue authorities.
In Florida, an economic nexus is established for your enterprise if your sales in the state exceed 100000 based on the sales from the Previous Calendar Year.
While calculating the sales or number of transactions for determining economic nexus, Florida requires transactions made through marketplaces, like Amazon, eBay, etc. to be excluded. Transactions made for resale purposes should be excluded while determining whether a business has exceeded the Florida economic nexus threshold. Finally, the sale of products that are non-taxable in Florida should be excluded while determining the establishing of nexus in Florida.
For an in-depth understanding, read our comprehensive guide on economic nexus reference periods.
Which goods are taxable in Florida?
For businesses in Florida, local sales tax is applicable on the sale of all tangible personal property, admission, storage, or rental, unless the transaction is exempt. Examples include sales of taxable items at retail, repairs or alterations of tangible personal property, rentals or leases of personal property, admission fee to any place of amusement, sport, or recreation, rentals or leases of personal property, etc.
Businesses need to stay updated on current tax information as well as the associated obligations and exemptions to avoid any compliance issues.
What items are exempt from Florida sales tax?
Florida exempts several items from sales tax- oral hygiene products like toothpaste, dental floss, mouthwash; optical goods like prescription eyeglasses, lenses; certain chemical compounds and test kits used for the diagnosis or treatment of disease; diapers; specified general grocery items, to name a few.
Understanding these exemptions is vital for businesses to calculate sales tax accurately in Florida. If you are uncertain about the tax status of specific items, seek guidance from professionals at Galvix.
Is SaaS taxable in Florida?
In Florida, the sales tax laws consider certain types of software, SaaS, and related services as taxable. These include:
- SaaS - On premises: This refers to Software as a Service installed and operated from the customer's in-house server and computing infrastructure rather than a third-party server.
- Software delivered on tangible media: Software distributed and obtained through physical means, such as CDs or DVDs.
However, sales tax laws change frequently, so it is vital to remain up-to-date with the latest regulations on the sales tax of Florida for digital goods. Checkout our latest blog to learn more about SaaS sales tax.
What is the deadline to obtain a Florida sales tax permit after establishing a nexus?
If a business has a physical nexus in Florida, it must obtain a sales tax permit from the Department of Revenue and start collecting sales tax on transactions as on the date of establishing the physical nexus. Businesses that establish an economic nexus in Florida need to obtain a sales tax permit and start collecting taxes, latest by next transaction, from the date they establish the economic nexus.
It is important to obtain the sales tax permit and start collecting taxes as per the deadlines mentioned above, in order to avoid back taxes and penalties.
How can one get a Florida sales tax permit?
To obtain a sales tax permit in Florida, businesses need to register with the Department of Revenue. This process is streamlined and can be completed online through the online portal provided by Department of Revenue. To comply with Florida's sales tax laws, businesses need to get a tax permit.
To get a sales tax permit in Florida, you need to provide detailed information about the business, such as the type of business, FEIN, personal details of the owner, business registration, nature of business activities, and several others on the Department of Revenue website. You will then get a sales tax number. This number is important for collecting, reporting, and paying the sales tax to the state government.
For detailed instructions and guidance on the registration process, connect with the experts at Galvix.
How should a business collect sales tax in Florida?
Businesses in Florida must collect sales tax from customers on relevant transactions. The collected tax must align with the Florida sales tax rate, which varies by location. Enterprises should regularly verify the sales tax rates to ensure accurate collection. To learn the best practices, explore our sales tax compliance guide.
Where can I file my Florida sales tax return?
You can file the Florida sales tax return by visiting the online portal provided by the Department of Revenue at: https://taxapps.floridarevenue.com/taxregistration.
When should a business file Florida sales tax return?
Businesses in Florida must file state sales tax returns periodically. The frequency, i.e., monthly, quarterly, or annually, is determined by the state based on the tax liability.
Typically, sales tax and use taxes is due monthly, with returns and remittances filed on or before the 19th day after month end for the previous month’s sales. However, businesses can request a different filing status based on their annual tax liability.
In general, the following are the filing deadlines for Florida, based on the assigned filing frequency to you by the state:
- Monthly Filing: 19th day after month end
- Quarterly Filing: 19th day after each quarter end
- Yearly Filing: 19th day after year end
It’s crucial to adhere to the assigned schedule to avoid penalties.
How does Florida determine the sales tax filing frequency for my business?
The Department of Revenue will assign you a filing frequency. Typically, this is determined by the size or sales volume of your business. State governments generally ask larger businesses to file more frequently.
Generally, sales tax in Florida is due monthly, with returns and remittances to be filed on or before 19th day after month end. You may request quarterly filing status if your annual tax liability is less than 1000. You may request annual filing status if the tax liability for the year is less than 100.
Are there any benefits if a business files Florida sales tax on time?
When filing and paying electronically on time, you may be eligible for a collection allowance. The allowance is 2.5% of the initial $1,200 of tax owed, capped at $30 per reporting location. If your tax due is less than $1,200, the allowance will be proportionately less than $30.
What penalty is applicable if a business fails to file Florida sales tax?
Penalties are applicable if a business fails to file and pay sales tax before the due date in Florida. Filing or paying tax late may result in a late filing penalty of 10% of the tax owed, with a minimum of $50, even if no tax is due. Taxpayers required to file and pay electronically face additional penalties of $10 each for failure to file or pay electronically, alongside any other applicable penalties. More details about this can be found here.
What are the key things to remember while filing sales tax in Florida?
While filing taxes in Florida, businesses must remember to account for sales tax holidays and potential tax discounts. Sales tax holidays offer temporary tax exemptions on specific items, and tax discounts may be available for timely filings during the reporting period. Staying updated on these can maximize compliance efficiency.
What is the sales tax on shipping in Florida?
Delivery service fees are usually taxable when associated with the sale of taxable goods. However, if the fee is separately indicated on an invoice and can be avoided by the purchaser's decision or action (e.g., opting to pick up the item), it is not subject to tax. The tax rate aligns with the Florida state sales tax rate applicable to the goods sold. Businesses should levy sales tax on shipping accurately for compliance. More details about this can be found here.