If you run a business in New York, you may be required to collect and remit sales tax. Many small business owners are not sure whether their business qualifies, what rate applies, or how to register. Here is what you need to know.
What Is New York Sales Tax
New York State sales tax is a tax collected by businesses on the sale of taxable goods and services. The collected tax is then remitted to the New York State Department of Taxation and Finance on a quarterly basis. The base New York State sales tax rate is 4%, but most businesses also collect a local rate on top of that.
In New York City the combined rate is 8.875%. In other counties across New York State the combined rate ranges from 7% to 8.75% depending on location.
Who Needs to Register for NY Sales Tax
You are required to register for a New York State sales tax Certificate of Authority if your business:
- Sells taxable goods or services in New York State
- Has a physical location in New York State
- Has employees working in New York State
- Makes more than $500,000 in New York sales and more than 100 transactions per year (economic nexus)
- Sells taxable items at trade shows or craft fairs in New York
What Is Taxable in New York
Not everything is subject to sales tax in New York. Taxable items and services include:
- Retail goods (clothing over $110 per item)
- Prepared food and beverages
- Digital products and software
- Certain services such as interior design and photography
Items that are generally exempt include:
- Groceries and unprepared food
- Prescription drugs
- Clothing and footwear under $110 per item
- Residential utilities
How to Register for NY Sales Tax
Registration is done online through the New York State Department of Taxation and Finance website. You will need:
- Your EIN (Employer Identification Number)
- Business name and address
- Description of your products or services
- Date you expect to begin making taxable sales
Registration is free. Once approved you will receive a Certificate of Authority which must be displayed at your place of business.
How Often Do You File NY Sales Tax Returns
Most businesses file quarterly using Form ST-100. The filing schedule depends on your annual sales tax liability:
- Annual liability under $3,000 — file annually
- Annual liability between $3,000 and $300,000 — file quarterly
- Annual liability over $300,000 — file monthly
Late filing results in penalties and interest. If you miss a deadline contact a bookkeeper or tax preparer as soon as possible to minimize penalties.
Summary
If your business sells taxable goods or services in New York State you are likely required to register for sales tax, collect it from customers, and file returns on a regular basis. The registration process is straightforward but the ongoing compliance requires attention to deadlines and rate changes.
Not sure if your business needs to collect sales tax? We help small businesses in New York register for sales tax and stay compliant with filing deadlines. Contact us and we will sort it out for you.