Calculating Nexus in Florida
This one's straightforward. You establish a physical nexus by:
- Business Locations: A store or office in Florida plants your business roots in the state.
- Employees: Having workers, whether sales, remote, or maintenance staff, in Florida counts too.
- Inventory: Stock in a Florida warehouse or storage? That's a yes.
- Property: Own or lease property here? That includes land, buildings, or even equipment and vehicles used in-state.
- Delivery Vehicles: Using vehicles for Florida deliveries adds to this list.
Economic activity matters too. You hit economic nexus in Florida if:
- Your sales of tangible personal property exceed $100,000 to Florida customers in a year.
- You sell to over 200 Florida customers in a year. Once you're in this zone, collecting Florida sales tax on all sales is a must, buyer location notwithstanding.
If you're an out-of-state retailer linked to a corporate group with a presence in Florida, this applies to you, especially for mail-order sales. Here's how it works:
- Being in a group where another member has a physical or economic nexus in Florida pulls you into the nexus net.
- In such cases, you're expected to collect Florida sales tax on all sales to Florida customers, no matter where your actual base is.
Florida doesn't have a rule for this. So, out-of-state retailers aren't automatically tied to Florida nexus just through online referrals.
Since July 1, 2021, there's a rule for marketplace facilitators—think Amazon, eBay, and Walmart. If they're set up in Florida or have facilitated over $100,000 in sales or 200-plus Florida customers in the last year, they must register and collect state sales tax on Florida-bound transactions. This law ensures that all sales to Florida customers, even from sellers without a Florida base, contribute to the state's sales tax.
Sales Tax Registration in Florida
How to Get Your Florida Sales Tax Permit
Registering for a sales tax permit in Florida is like hunting for treasure. Here's how to find your way:
- Start by gathering all the info you'll need – business name, address, EIN or social security number, NAICS code, and details about your offerings. This is your business compass.
- Head over to the Florida Department of Revenue's (DOR) website to access their online registration portal – your gateway to obtaining a sales tax permit.
- Fill out the online application with all the required business details. Stay true to your course with accurate information.
- Double-check everything before submitting – like verifying your coordinates before a voyage. Once confident, submit your application.
- Don't forget to save your confirmation after registering. It's your proof of successful registration, so keep it safe.
- With your sales tax permit secured, you're ready for business in Florida. Remember, your tax responsibilities are an ongoing journey, so stay updated to keep your business sailing smoothly.
Cost of Registering for a Florida Sales Tax License
There's a $50 fee for obtaining a Florida sales tax license. You can pay this online or by mail, depending on your registration method. Just note, this fee is non-refundable.
Federal Tax ID for Florida Sales Tax License
Here's a crucial part of your Florida sales tax voyage: the Federal Tax ID Number or EIN. This IRS-issued nine-digit number is essential for partnerships, corporations, or multi-member LLCs during registration.
Sole proprietors or single-member LLCs can use their social security number, but an EIN is usually preferred for privacy. It's like choosing the right flag for your business ship.
Keep your EIN close as it's a vital part of your registration toolkit.
Other Florida Registrations to Consider
Your journey might also take you to other Florida agencies, depending on your business type. Here's a quick glance:
- The Florida Department of State, Division of Corporations, is where you'll register if your business is a corporation, LLC, partnership, or uses a fictitious name.
- The Florida Department of Business & Professional Regulation is your go-to for state-specific licenses or permits for various professions and industries.
- Local City and County Offices are essential stops for local business tax receipts or occupational licenses. Make sure to check in with local authorities in areas where you operate.
Guide to collecting sales tax in Florida
Is Florida an Origin or Destination Sales Tax State?
In Florida, a destination-based sales tax state, the tax rate applied to goods and services is based on the delivery location within Florida, not where your business is planted.
What Sales are Subject to Sales Tax in Florida?
Almost every sale in Florida is taxable unless it's exempt. Additionally, most counties add a discretionary sales surtax, which varies by county and changes annually. You can find the current rates on the Florida Department of Revenue's website.
The buyer pays the sales tax, which is added to the sale price. Florida's general state sales tax rate is 6%, but there are variations:
- Retail sales of new mobile homes are taxed at 3%.
- Amusement machine receipts face a 4% tax.
- Rental/lease/license of commercial real property is taxed at 5.5% in 2023, dropping to 4.5% in 2024.
- Electricity bears a tax rate of 6.95%.
Is Software as a Service (SaaS) Taxed in Florida?
Software as a Service (SaaS) is not currently taxed in Florida, as per a Technical Assistance Advisement (TAA) from the Florida Department of Revenue. The TAA notes that SaaS is not tangible personal property, is delivered electronically, often accessed via subscription, and used with tangible items like computers. However, this interpretation could change, so stay alert to any updates.
What is Exempt from Floridane Sales Tax?
Certain items are exempt from Florida sales tax, like general groceries (cereals, baked goods, meat, vegetables, dairy products, etc.), prescribed medicines, medical equipment (including prosthetics, eyeglasses, dentures), and specific agricultural equipment.
Who is Eligible for Florida Sales Tax Exemptions?
In Florida, sales tax exemptions are like special islands in a vast ocean. Nonprofits, items bought for resale or production, specific goods and services like most groceries and medical supplies, and out-of-state sales are typically tax-exempt. Eligible entities need a Florida Annual Resale Certificate for Sales Tax for tax-free purchases for resale.
What To Do If Your Customer is Exempt from Sales Tax in Florida?
If a customer claims sales tax exemption, verify it with a valid Florida Annual Resale Certificate for Sales Tax or a Florida Consumer's Certificate of Exemption. Keep these documents for your records, as they're crucial in case of an audit.
What if You Lose a Florida Sales Tax Exemption Certificate?
If you misplace a Sales Tax Exemption Certificate, promptly contact the customer for a replacement. You can also verify and obtain copies via the Florida Department of Revenue's online system. Keeping digital backups is a good practice for such crucial documents.
Steps for Filing a Florida Sales Tax Return
New businesses, take note: you must file monthly in your first year.
After that, the Florida Department of Revenue might adjust your schedule based on your sales volume. Your filing frequency in Florida hinges on your annual sales tax liability:
- Monthly: Required if annual tax collections exceed $1,000.
- Quarterly: Required for collections between $501 and $1,000.
- Semi-Annually: For collections between $101 and $500.
- Annually: If collections are less than $100.
What If a Filing Date Falls on a Weekend or Holiday?
If a filing due date lands on a weekend or holiday, the deadline extends to the next business day. This little grace period is like finding a safe harbor for your tax obligations. Whether online or paper filings, this extension applies, but always double-check the dates with the Department of Revenue.
How to File a Florida Sales Tax Return
To file your Florida sales tax return:
- Gather detailed sales records.
- Visit the Florida Department of Revenue website and head to the "File and Pay" section.
- Log in or create an account.
- Enter your sales information accurately.
- The system calculates the tax owed.
- Review everything, then submit your return.
- Make your payment via the provided electronic methods.
Penalties for Late Filing in Florida
Be aware of potential penalties for missing the boat on tax obligations:
- Failure to File: $100 penalty per month or part of a month.
- Failure to Pay: $250 penalty per month or part of a month.
- Late Filing: 5% penalty per month, capped at 25% of the tax due.
- Late Payment: 1% penalty per month, capped at 25% of the tax due.
- Underpayment: 1% penalty per month, capped at 25% of the underpaid amount.
- Interest: Charged at 1.5% per month on unpaid taxes.
Sales Tax Incentives in Florida
Florida rewards timely filers with a 2.5% discount on the tax due. To qualify, file and pay electronically by the due date. For example, on a $100 tax bill, paying on time and electronically means you'd only owe $97.50. This discount is available for all sales tax collectors in Florida. Remember to file electronically and pay by the 20th day of the month following your reporting period.
Florida Sales Tax Holidays
Florida spices things up with several sales tax holidays throughout the year, offering exemptions on specific items:
- Back-to-School: In August, for school supplies.
- Diaper and Baby Formula: In January, for diapers and formula.
- Disaster Preparedness: In May, for emergency supplies.
- Energy Star Appliance: In July, for energy-efficient appliances.
- Tools Time: In September, for tools and home improvement items.