Sales Tax Guide for Ohio

What Is Taxable in Ohio?

In Ohio, tangible personal property is generally subject to sales tax. However, certain items are exempt, including prescription drugs, most food items for off-premise consumption, and some medical equipment.

If your business sells taxable goods or services, you must collect and remit sales tax correctly. It’s also essential for businesses to verify if additional use taxes are applicable when purchasing out-of-state products.

Who Needs to Collect Sales Tax?

Businesses required to collect sales tax in Ohio include:

• Retailers with a physical presence in Ohio
• Online sellers that meet the state’s economic nexus threshold
• Certain service providers, depending on the type of service offered

Ohio enforces an economic nexus threshold of $100,000 in sales or 200 transactions per year. Exceeding this limit requires you to register and collect sales tax, regardless of physical presence. Non-compliance may result in penalties and back taxes, emphasizing the importance of doola’s Bookkeeping service for staying compliant and avoiding legal issues.

How to Register for a Sales Tax Permit in Ohio

Obtaining a sales tax permit in Ohio involves these steps:

1. Gather necessary documentation: EIN, business license, and business details.
2. Visit the Ohio Department of Taxation website.
3. Complete the online application form.
4. Receive your Vendor’s License and start collecting sales tax accordingly.

Collecting sales tax without a permit is illegal, so ensure you register before engaging in taxable sales. Consider doola’s expert bookkeeping team to assist with the process, making sure you focus on growing your business without administrative burdens.

How to Calculate Sales Tax in Ohio

To correctly calculate sales tax in Ohio, follow these steps:

Step 1:
Identify the appropriate sales tax rate based on both your business and customer’s location.

Step 2:
Collect the necessary amount at the time of sale.

Step 3:
Maintain accurate records of all transactions.

Ohio requires businesses to file sales tax returns either monthly or semiannually, depending on your sales volume. Ensure timely filings to avoid late fees and penalties.

Additionally, be aware of varying local tax rates depending on different counties or municipalities, as these may necessitate adjustments to your calculations.

Common Sales Tax Exemptions in Ohio

Some transactions in Ohio qualify for sales tax exemptions, such as:

• Purchases intended for resale, which require a resale certificate
• Sales made to nonprofit organizations
• Certain agricultural and manufacturing purchases

To claim exemption, use the correct exemption certificates and maintain precise records. Incorrect use of these certificates can result in audits and fines.

Remote Seller and Marketplace Sales Tax Rules in Ohio

Ohio has specific sales tax rules for remote sellers and third-party platforms such as Amazon, eBay, Shopify, and Etsy. Businesses meeting the $100,000 sales or 200 transactions threshold must comply with Ohio’s remote seller sales tax regulations.

What Triggers a Sales Tax Audit

A sales tax audit from the Ohio Department of Taxation may be triggered by several factors, including missing or incorrect sales tax filings, frequent late tax payments, discrepancies in reported sales versus actual receipts, and misuse of exemption certificates.

Reduce the risk of audits by keeping meticulous records of all sales, exemptions, and payments. Conduct regular internal reviews to ensure the accuracy of your tax filings.

FAQs About Sales Tax in Ohio

Common questions regarding Ohio sales tax include:

Are digital goods taxable in Ohio? 

Certain digital goods may be taxable. Always check Ohio’s state guidelines.

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

If they exceed the $100,000 in sales or 200-transaction threshold, yes.

What if I overcharge or undercharge sales tax? 

You may need to either refund customers or pay the difference to the state. Accurate records are key to avoiding these issues.

Are any services taxable in Ohio? 

Certain services are taxable, including telecommunications and some repair services.

Stay Compliant With doola

Sales tax compliance doesn’t need to be burdensome. By staying informed and utilizing the appropriate tools, you can avoid penalties and ensure business continuity.

doola can offer guidance and tools to guarantee compliance, equipping businesses with financial solutions, tax advice, and bookkeeping services.