Do you Know How to Calculate Sales Tax for your Business?

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— after all, it has a direct impact on our lives and can vary a lot depending on several factors.

Say you go to a store to buy a bottle of soda. You look at the price tag and it says $ 2.50. However, when you get to the checkout, you end up paying a little more than that. How can you know exactly how much you will end up paying?

The price you pay for a product includes a percentage related to its sales tax, which doesn’t go to the seller but instead it goes to the government. This also applies to several other categories of goods, depending on your country and state.

Because of such variations, it might be hard to understand how sales taxes work usa cell phone number list and how to calculate them.

However, there are ways to make them more tangible so that your finances don’t get out of hand. Check out the answers to most of the questions related to this subject.

What are Sales Taxes?
Do Sales Taxes Go to the Federal Government, States, or Cities?
Which States do not Have Sales Taxes?
Do Businesses Need to Charge Sales Tax?
How to Calculate Sales Tax?
What is a Sales Tax Calculator and What Does it Do?
How to Calculate Sales Tax for Your Business
Wrap Up
What are Sales Taxes?
Sales taxes are a kind of tax applied to the sale of certain products and services in the United States, Canada, and other countries.

It’s a mandatory tax paid directly by the consumer when purchasing these goods and it corresponds to a percentage of the price.

Different states and countries deal differently with sales taxes but he same concept applies everywhere: they are based on the actual price of products and collected by the sellers.

Such value is represented by a percentage. If a product has a sales tax of 9.45%, it means that 9.45% of its value consists of a sales tax while the remainder is directly passed to the seller. This information is usually shown on purchase receipts.

In addition, not all kinds of products have sales taxes. In fact, each business is required to follow a list of goods that are taxable in order to stick to the law. For example, in most places, dietary foods and health supplements are exempt from tax.

Do Sales Taxes Go to the Federal Government, States, or Cities?
In the United States, all sales taxes are regulated by the states. This means that the states are the ones that collect sales taxes, not the federal government.

Since each state deal with its own sales taxes, it also means that they are the ones that set those values.

So, for instance, as of 2020, the sales tax in Texas is 8.19% while Kentucky’s is 6%. Because of this, businesses that operate country-wide end up having to deal with multiple sales taxes depending on where purchases are being made.

However, some cities have the autonomy to regulate sales taxes in states that are exempt from them. You can learn more about this in the answer to the following question.