How to File Ohio Sales Tax
If you are a vendor of most goods and many services who has physical or economic nexus in Ohio, you are required to collect and file sales tax. What exactly does it mean to have “nexus” in a state?
Physical nexus means that you have enough of a physical presence or other direct connection to a state to justify owing sales tax to that state. If you have a store in Ohio, that is physical nexus. But physical nexus doesn’t require operating a regular place of business in a state. You might have physical nexus with Ohio if you have a mailing address here, an employee who works here, inventory stored here, or even if you do business in the state temporarily, such as at a fair or trade show.
Even if there is no physical nexus, you might have an “economic nexus.” If your business is situated outside Ohio but has more than $100,000 in sales annually in the state, or more than 200 separate transactions in Ohio in a calendar year, you are considered to have economic nexus with Ohio and be required to collect and file Ohio sales tax.
If you are not sure whether you have sufficient nexus to Ohio to need to file sale tax here, speak with an Ohio tax professional. Assuming that you don’t owe sales tax could lead to problems with the Ohio Department of Taxation.
How to Get Set Up to File Ohio Sales Tax
In order to begin filing Ohio sales tax, you must register for a sales tax permit. This is easily done online at the Ohio Business Gateway. If you are based in Ohio, you should choose the option for “County Vendor’s License;” if based out of state, select “Ohio Taxation — New Account Registration and Fuel Permit.” Then select the option for “Sellers’ Registration.” In-state sellers need an Ohio sales tax permit (Form ST-1), which costs $25 payable by ACH debit. Out-of-state sellers need Form UT-1000, for which there is no charge.
Whether in-state or out-of-state, you will need to know your business entity type, business identification information, locations, NAICS code, and the date on which you will begin to collect Ohio sales tax.
Collecting Ohio Sales Tax
Collecting sales tax is fairly straightforward for businesses based in Ohio; tax is collected at the sales tax rate for the location of the business. Ohio state sales tax is 5.75%, and there may be an additional sales tax at the county level. For businesses with more than one Ohio location, the sales tax rate is based on the sale’s point of origin.
For sellers outside of Ohio who are making sales into Ohio, the sales tax they must collect is based on the Ohio buyer’s location rather than the location of their own business.
How Often to File Ohio Sales Tax
When you register for your Ohio sales tax permit, the state will assign you a filing sales tax frequency. The frequency is calculated based on the amount of sales tax you collect from Ohio customers, but you will need to file either monthly or semiannually (twice a year). Most vendors in Ohio are required to pay on a monthly basis.
Regardless of whether you must file sales tax monthly or quarterly, payments are due by the 23rd day of the month following the close of the reporting period. If you are a monthly filer, for example, your June sales tax payment is due by July 23.
How to File Sales Tax Online
Not only can you file sales tax online in Ohio, the state now requires electronic filing for all vendors, even those with a low volume of sales. There are two options for electronic filing: the Ohio Business Gateway and the Telefile system. As the name suggests, Telefile involves entering data using the keypad on a touch-tone telephone. Telefile is only available to vendors who have a regular county vendor’s license and who operate in a single Ohio county.
The Bottom Line
Although the state of Ohio has attempted to streamline filing sales tax as much as possible, the process can still be burdensome for many Ohio vendors, especially small businesses. Many small businesses do not have the time or the bandwidth to manage tax filings. However, failing to do so can result in serious consequences for a business of any size.
If you are an Ohio business, or a business outside the state doing business in Ohio, Gudorf Tax Group can take the burden of filing sales tax off your shoulders so you can focus on the work of your business. We invite you to schedule an appointment today with the accounting and tax preparation professionals at Gudorf Tax Group.