Sales tax is charged on transactions for services and products that your business offers in every state you operate in. If your business has a physical location in a state, you will most likely have nexus in that state – meaning you need to pay sales tax for transactions in that state. Each state has its own list of taxable goods, but be aware that local governments may have additional lists to observe. Always check with a local tax advisor. There are some items which are commonly exempt from state sales tax, such as food, agricultural products, prescription drugs, or so called “intangible property” which is something that has no physical substance. Individual state laws can be quite complex, and something that counts as intangible property in one state, may not count as intangible property in another.
So far we have only discussed products, but services are also charged with sales tax. This happens less than with goods, but is more likely to occur when connected to products, such as a delivery charge. Some services are normally exempted from being charged sales tax, such as doctor’s services, dentist’s services, attorney services, as well as religious organization’s services. Again, make sure you check your local tax jurisdiction regulations to ensure you’re charging the right kind of tax.