Sales Tax Guide for New Jersey

What Is Taxable in New Jersey?

In New Jersey, most tangible personal property is subject to sales tax. However, certain items are exempt, including groceries, prescription medications, certain medical devices, and clothing. Some services like hotel accommodations and telecommunications are also taxable.

If your business sells taxable goods or services, you must collect and remit sales tax appropriately. Ensure to verify if additional use taxes apply for out-of-state purchases.

Who Needs to Collect Sales Tax?

New Jersey law requires specific businesses to collect sales tax, including:

• Retailers with a physical presence in New Jersey
• Online sellers surpassing the state’s economic nexus threshold
• Certain service providers, as specified by state law

In New Jersey, the economic nexus threshold is $100,000 in sales or 200 transactions annually. Exceeding this requirement, even without a physical presence, means you must register and collect sales tax. Failing to comply can result in fines and back taxes, making doola’s Bookkeeping service critical to staying compliant.  

How to Register for a Sales Tax Permit in New Jersey

Registering for a sales tax permit in New Jersey involves:

1. Assembling necessary documents: EIN, business license, and relevant business information.
2. Visiting the New Jersey Division of Revenue website.
3. Completing the online registration for a Business Registration Certificate.
4. Receiving your sales tax permit and starting to collect tax.

Collecting sales tax without a permit is illegal, so ensure registration before making taxable sales. New Jersey’s Department of Revenue portal is available for registration and submissions.

doola’s expert bookkeeping team can assist with the registration process, allowing you to concentrate on business growth instead of paperwork. 

How to Calculate Sales Tax in New Jersey

To accurately calculate sales tax in New Jersey, follow these steps:

Step 1:
Identify the applicable sales tax rate based on the location of your business and the buyer.

Step 2:
Collect the accurate amount at the transaction point.

Step 3:
Maintain detailed records of all sales and tax collected.

New Jersey requires filing sales tax returns either monthly or quarterly, depending on sales volume. Avoid late fees by observing filing due dates.

Make sure to consider different sales tax rates depending on county or city within New Jersey, as additional local charges might apply to your calculations.

 How to File and Pay Sales Tax in New Jersey

Filing and paying sales tax in New Jersey requires an understanding of resale tax exemption rules. Some products or services are non-exempt, so thorough knowledge is essential.

The general filing process includes logging into the New Jersey Division of Revenue’s online system, reporting total and taxable sales, calculating owed taxes, and paying with an accepted method.

While this might appear daunting, doola’s specialized bookkeeping services can provide assistance, ensuring compliance and highlighting available tax exemptions.

Common Sales Tax Exemptions in New Jersey

In New Jersey, certain businesses and transactions qualify for sales tax exemptions, such as:

• Purchases for resale (require a resale certificate)
• Transactions with nonprofit organizations
• Certain manufacturing and agricultural equipment purchases

These exemptions require the correct certificates and documentation. Inaccurate use of exemption certificates can lead to audits and potential fines.

Remote Seller and Marketplace Sales Tax Rules in New Jersey

New Jersey enforces specific rules for remote sellers and marketplaces like Amazon, eBay, Shopify, and Etsy. 

With an economic nexus threshold of $100,000 in sales or 200 transactions, businesses exceeding these limits must adhere to New Jersey’s sales tax regulations for remote sellers.

New Jersey does not offer a flat tax program analogous to Alabama’s Simplified Sellers Use Tax but requires collection of the correct local and state tax rates.

What Triggers a Sales Tax Audit

The New Jersey Division of Taxation might audit businesses for reasons such as missing or incorrect sales tax filings, consistently late payments, discrepancies between reported and actual sales, and misuse of exemption certificates.

Businesses can mitigate audit risks by maintaining comprehensive records of sales, exemptions, and tax payments. Regular internal audits ensure accuracy in tax filings.

FAQs About Sales Tax in New Jersey

Common questions about New Jersey sales tax include:

Does New Jersey tax digital goods? 

Digital goods are generally taxable, although some exceptions exist. It is important to review current state guidelines.

Do out-of-state businesses need to collect New Jersey sales tax? 

Yes, if they exceed the economic nexus threshold of $100,000 in sales or 200 transactions annually.

What should I do if I’ve overcharged or undercharged sales tax? 

You may need to adjust customer charges or pay the state the difference. Accurate record keeping can prevent such issues.

 Are services taxable in New Jersey?

Most services are not taxed, though some specifics, such as maintenance and repair services, are taxable.

Stay Compliant With doola

Managing sales tax compliance doesn’t have to be complicated. Up-to-date information and reliable tools can help you avoid penalties and keep your business operations smooth.

doola offers guidance and tools to ensure compliance, providing comprehensive solutions for businesses in bookkeeping, tax management, and more.