Should you collect sales tax in Florida?
Sales tax is levied on retail selling tangible personal property to your customers. However, you will collect the sales tax if you determine the nexus in Florida. Nexus is the presence that may come physically or economically.
Physical nexus is typically created when your business has a store, warehouse, or any office location in Florida. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Florida.
A physical nexus is integrated when your business is engaged in the following in Florida:
- Leasing or owning any physical property in Florida.
- Maintaining, occupying, or using a place of business or an office in Florida.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to establishing a market in the state.
- Having a distribution place in Florida.
- Employees working in the state.
Is it constituting an Economic nexus in Florida?
You are required to comply and register under sales tax rules if your retail business sales in Florida exceed $100,000 during the current or previous calendar year.
Kindly read through the guidance the Florida Department of Revenue issued on activities that create a business nexus in the state.
How can you Register for Sales tax in Florida?
You can use the Florida Business Tax Application to apply for tax registration and obtain Florida’s tax account number.
Alternatively, you can submit the licensing application to their mailing address in form DR-1N.
There is no registration fee for submitting your application.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- Personal and Business IDs (e.g. SSN, FEIN)
- Business Information (trade name, address, legal name, etc.)
- Business starts date
- Contact information
- Employee Information
- Information of all owners and managers
Is your product or services liable to Sales tax in Florida?
Tangible Property: Sales tax in Florida is imposed on each sale of tangible personal property, e.g., Furniture, giftware, toys, etc.
Services: Although the services are not subject to sales tax in Florida if any service or labor costs create tangible personal property, then sales tax is chargeable. For more information, click here.
Digital Product: Sales tax or use tax doesn’t apply to digital products as they are not considered as tangible property. State says that the digital goods that are in tangible form only are chargeable to tax. See here for guidance (pg. 2).
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. This is non-taxable in Florida. Review the Florida Revenue Department advisory on the same.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, food stamps, etc. Please click here (pg. 9) to see what exemptions are covered. You may search on the department’s website for any specific item related to your business to see what is exempt or taxable.
Additionally, the Florida Department of Revenue website has a search box wherein you can write your specific query and find its answers.
How should you collect and calculate state taxes in Florida?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not Florida-based, as the sales tax is destination-based in Florida, which means you must collect taxes on tangible property sold to buyers based in Florida.
However, complexities are involved when you have a business nexus, even outside the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Florida has a base sales tax rate of 6%, followed by the discretionary sales surtax implemented by the counties, which vary based on the cities and municipalities. You may visit the sales tax rates page on the Florida Revenue Department website.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectable = Sale value * (6% plus surtax rate)
Here is the advisory from the state on sales tax calculation. Refer to pg. 5.
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of the items sold. If shipping charges are separately stated on the invoice, there will be no tax applicability; however, you need to collect the tax on the total sales price, including shipping charges, if not stated separately. Refer to more detailed guidance on delivery charges.
How should you file sales tax in Florida?
There are multiple options available to you for reporting your sales tax.
E-file: E-file your return using the Florida Department of Revenue’s web portal.
File by Mail: You can file the return using the form DR-15.
You must pay the sales tax along with the return to avoid penalties and interest. Please note that you must file and pay electronically when your business spends $5,000 or more in sales and use tax from July to June.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Florida Department of Revenue assigns you a filing frequency: Monthly, Quarterly, Semi-Annual or Yearly. Quarterly frequency is assigned when your annual sales tax collections are from $501 to $1,000. You can file semi-annually when your sales tax collections are $101 to $500. If your collections are below $100, you can file annually. Check here for filing frequency. According to your filing frequency, the due date for filing sales tax would be the 20th of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official Florida government advisory, where you can see what the state says about sales tax filing due dates.
Are there any fines or penalties for default when filing or paying sales tax?
The state levies a penalty of 10% of sales tax due if you default in filing the sales tax by the due date. Similarly, the penalty will be 10% of the tax due if you pay after the due date. The minimum penalty amount would be $50 in any case. Interest is accrued on any unpaid tax at the floating rate.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines the Florida Revenue Department issued for penalties and interest.
Sales tax holiday in Florida
The Florida sales tax holiday applies to Disaster Preparedness, Children’s Books, Back-to-School Supplies, Tools, Energy Star Appliances, etc. Each category has a different sales tax holiday period. For detailed information, refer to the Florida Revenue Department advisory here.