Why should I collect sales tax from my client?

Every business must collect sales taxes on taxable products and services. As you start your business, the first thing you must do is determine if your products or services are taxable, the tax rate, and the difference in taxes if you are selling to individuals in different parts of your state. You must charge sales tax to your client because you are selling products and providing services to them.

Generally, for sales tax collection, you must get a license from your state. On each taxable transaction, you calculate the applicable sales tax, collect it from the buyer, keep tax records, and then file a tax return and pay the taxes to your state. You'll pay monthly, quarterly, or annually, depending on your level of sales.

Similarly same rules apply for Internet sales and catalog sales: You have to charge and collect sales tax when you deliver the product to a state in which you have a "physical presence."

When you sell products or services over the Internet, your obligation to collect sales tax is determined by the location of the buyer. If the buyer is located in a state where a sales tax applies, and your business has a physical presence in that state, you must collect the sales tax from that buyer.

Similarly, if you have any location, facility, employee, call center, address, or even one independent sales person in a state than you have to collect taxes in that state.