What Is a Texas Sales Tax Permit?
Most businesses in Texas will need to have a sales tax permit — also known as a sales tax license — before they can begin doing business. This requirement applies to sole proprietorships, Limited Liability Companies (LLC) and corporations.
Conducting business without having a sales permit can result in fees and penalties. Luckily, you are in the right spot to learn how to avoid getting into this situation as we outline an easy-to-follow and uncomplicated way to apply for your sales tax permit.
Applying for a Texas Sales Tax Permit
Depending on your preferences, there are two ways to register for your Texas sales permit: registering online and applying by mail.
Registering Online
The first step is to go to the comptroller.texas.gov website and click on the "Sales Tax Permit Application" link. This will open up a new page that will give you the option to register as a "New Permit Applicant." As a first-time user, you'll need to create a profile and set up your user ID and password.
Once your profile is created, it's time to start working on your application. Key information required for the application will include:
Social Security number
Texas taxpayer number
Driver's license
Contact information: email, address, phone number, alternate contact information, etc.
The application will include a questionnaire covering your business activity, including:
Do you have a distribution center or warehouse outside your main physical business location?
Do you have a franchise or licensee?
Do you operate an online marketplace?
Will you sell alcohol products?
Once you review and confirm your answers, you will put in the "first date of taxable sales," which is when you plan on starting your business and selling products and services. You will also need to add all of your business information, including business name, address, phone number, etc.
The application process will also ask if you are an online business and will establish your North American Industrial Classification System (NAICS) code if needed.
The end of the application will give you a chance to review your information and make sure that you did not make any errors. If everything looks good, hit the "submit" button. Now all you need to do is just wait two to three weeks to receive your Texas sales tax permit.
Applying by Mail
If you choose not to file online, you can download the application and submit it by mail. Make sure to print form AP-201 (Texas Application for Sales and Use Tax Permit) and send the completed paperwork to:
Comptroller of Public Accounts
111E. 17th Street
Austin, TX 78774-0100
Requirements of a Texas State Permit Holder
Once you receive your Texas Sales Permit and your doors are open for business, you now have the right to charge customers a sales tax on taxable items and services. Examples of taxable items include physical products such as clothing, furniture, computer equipment, software (including downloads) and services like auto repair and house cleaning. Key goods and services that are exempt from sales tax include groceries, medications, utilities and fuel. A full list covering taxable services can be found on the Texas Comptroller's website.
If your business is collecting a sales tax, the money will need to be sent to the Texas Comptroller of Public Accounts. The state sales tax is 6.25 percent, but the taxable amount may vary depending on where your business is located and the city or district tax rate. To get an accurate idea of what your sales tax rate is, use the Sales Tax Rate Locator.
