Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Do you need to collect sales tax in Ohio?
You’ll need to collect sales tax in Ohio if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Ohio?
Ohio considers a seller to have physical nexus if you have any of the following in the state:
- a place of business within this state, whether operated by employees or agents of the seller, by a member of an affiliated group of which the seller is a member, or by a franchisee using a trade name of the seller
- employees, agents, representatives, solicitors, installers, repair people, salespeople, or other individuals in Ohio for the purpose of conducting its business
- a person in the state for the purpose of receiving or processing orders of its goods or services
- makes regular deliveries of tangible personal property into this state by means other than common carrier (For example, the out-of-state seller has goods delivered to this state in vehicles which the out-of-state seller owns, rents, leases, uses, or maintains or has goods delivered by another member of an affiliated group, of which the out-of-state seller is a part, acting as a representative of the out-of-state seller)
- owns tangible personal property that is rented or leased to a consumer in this state, or offers tangible personal property, on approval, to consumers in this state
- owns, rents, leases, maintains, or has the right to use and uses tangible personal or real property that is physically located in this state
- is registered with the secretary of state to do business in this state or is registered or licensed by any state agency, board, or commission to transact business in this state or to make sales to persons in this state
- make more than $500,000 in sales in the state and uses a software or content delivery network in the state (read more p. 32)
You can click here to read exactly what the Ohio Department of Revenue has to say about what constitutes sales tax nexus in Ohio.
Do you have economic nexus in Ohio?
Effective August 1, 2019, Ohio considers vendors who make more than $100,000 in sales annually in the state or more than 200 separate transactions into the state in the current or last calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Ohio’s economic nexus guidance for sellers here.
Is what you’re selling taxable?
Many services in Ohio are taxable. Check with the Ohio Department of Revenue if you are unsure whether or not what you sell is taxable.
Tangible products are generally taxable in Ohio, with a few exceptions. These exceptions include certain foods, prescription drugs, some building materials and more. Check here for a list of non-taxable tangible goods in Ohio.
Is SaaS taxable in Ohio?
SaaS is taxable for business use in Ohio and non-taxable for personal use. (Source)
How to get a sales tax permit in Ohio
You can register for an Ohio sales tax permit in one of two ways:
Register online at the Ohio Business Gateway.
In state based sellers: Choose “County Vendor’s license.”
Out of state based sellers: Choose “ Ohio Taxation – New Account Registration and Fuel Permit” and then Choose “Sellers Registration.”
You’ll need this information to register for a sales tax permit in Ohio:
- Business identification information
- Business entity
- Date you will begin collecting Ohio sales tax
- NAICS Code
For sellers located in Ohio an Ohio sales tax permit (form ST-1, called a vendor’s permit) is $25 and you must pay via ACH debit. For “remote sellers” (sellers located outside of Ohio but required to collect sales tax in Ohio due to sales tax nexus) form UT-1000 is free.
Collecting Sales Tax
The sales tax rate you collect in Ohio depends on whether you are based in Ohio or out-of-state.
How to Collect Sales Tax in Ohio if you are Based in Ohio
Ohio is an origin-based sales tax state. So if you live in Ohio, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located. The state sales tax rate (and use tax rate) in Ohio is 5.75%.
You can look up your local sales and use tax rates with TaxJar’s Sales Tax Calculator. In Akron, for example, there’s a total sales tax rate of 6.75% – due to an additional 1% due for sales in Summit County.
If you have more than one location in Ohio, then you would base the sales tax rate you charge on the point of origin of your sale.
How to Collect Sales Tax in Ohio if you are Not Based in Ohio
This is where things get trickier for online sellers. Ohio wants sellers who made a sale into Ohio from outside the state to charge sales tax based on the destination of the buyer.
Should you collect sales tax on shipping charges in Ohio?
Ohio considers delivery charges part of the price of a sale and therefore taxable.
Read a full explanation of sales tax on shipping in Ohio here.
When are Returns Due?
When you file and pay Ohio sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Ohio?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Ohio, you will be required to file and remit sales tax either monthly or semiannually.
Ohio sales tax returns are generally always due the 23rd day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Ohio you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Ohio
Calculating how much sales tax you should remit to the state of Ohio is easy with TaxJar’s Ohio sales tax report.
All you do is connect the channels through which you sell — including Amazon, eBay, Shopify, Square and more — and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Ohio sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in Ohio
You have three options for filing and paying your Ohio sales tax:
- File online – The state of Ohio requires merchants to file sales tax online. You can file sales tax online at the Ohio Department of Taxation, and also remit your payment through their online system. Here’s a step-by-step guide on How to File an Ohio Sales Tax Return.
- File by mail – FIll out form UST-1, though Ohio encourages sellers to file online
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.