Overview

Registering for a state sales tax permit formally authorizes your business to collect and remit sales tax in that jurisdiction. Most states require registration before you start taxable sales; failing to register can create personal liability for owners, back taxes, penalties, and interest. For federal context and general guidance about sales and use taxes, see the IRS Sales and Use Tax resources (https://www.irs.gov/businesses/sales-and-use-tax).

Who needs a permit?

  • Brick-and-mortar retailers, restaurants, and service providers that sell taxable goods or services in a state.
  • Online sellers with nexus — a sufficient connection — to a state (physical presence, economic thresholds, or marketplace facilitator rules).
  • Third-party sellers using state-based fulfillment (for example, warehousing or FBA). See our guide on State Sales Tax Registration for Sellers Using Fulfillment by Amazon for specifics: https://finhelp.io/glossary/state-sales-tax-registration-for-sellers-using-fulfillment-by-amazon/.

Registration triggers

Common triggers that require a permit include:

  • Having a physical location, employees, or inventory in a state.
  • Sales exceeding an economic threshold (often $100,000 in sales or 200 transactions; states vary).
  • Using a marketplace that does not collect tax on your behalf.

Step-by-step registration (typical)

  1. Determine nexus: map where you have physical presence, employees, inventory, or meet economic thresholds.
  2. Confirm which sales are taxable in each state (tangible goods vs. services, digital products, or exempt sales).
  3. Gather business details: legal name, DBA, EIN or SSN, business address, NAICS code, expected monthly sales, and estimated taxable sales.
  4. Apply through the state’s Department of Revenue or tax portal (many states offer online registration). Where to find links to state agencies: https://www.taxadmin.org/state-tax-agencies.
  5. Receive permit/account number and follow instructions for tax collection and filing frequency (monthly, quarterly, or annual).

Ongoing compliance requirements

  • Collect the correct tax rate at the point of sale (state + local). Keep tax rate files updated — rates change frequently.
  • File returns on the required schedule even if you have no sales (a zero return). States often penalize missed filings.
  • Maintain records for at least the period required by the state (commonly 3–7 years).
  • Remit collected tax by the due date; late remittance incurs interest and penalties.

Practical examples from practice

In my practice advising small retailers and e-commerce sellers, common scenarios include:

  • A regional retailer that needed to register in a neighboring state after opening a small distribution center; late registration created a significant backlog of liability that could have been avoided with earlier registration.
  • An online seller who underestimated economic nexus thresholds and had to register in multiple states retroactively. Early use of a checklist and sales-tracking helped limit exposure. For a ready compliance checklist, see our Sales Tax Compliance Checklist for Small Online Retailers: https://finhelp.io/glossary/sales-tax-compliance-checklist-for-small-online-retailers/.

Common mistakes to avoid

  • Assuming all sales are taxable — exemptions vary by state and product type (food, clothing, certain services may be exempt).
  • Failing to register where you have nexus (physical or economic).
  • Using incorrect tax rates or not applying local rates.
  • Not filing zero returns when required.

Tips to reduce risk

  • Register proactively in any state where you expect to meet nexus triggers.
  • Use sales-tax automation tools to manage rates, exemptions, and returns — this reduces human error.
  • Reconcile tax-collected amounts monthly and document exemption certificates (keep resale certificates on file).
  • When expanding to new sales channels or warehouses, consult your tax advisor before launch.

If you miss a deadline

Contact the state revenue department immediately. Many states allow penalty abatement or payment plans in first-time or reasonable-cause situations, but interest on unpaid tax typically continues to accrue.

Relevant resources

Interlinked FinHelp guidance

Final notes and disclaimer

This article summarizes common registration and compliance steps for state sales tax permits as of 2025. It is educational only and not a substitute for advice from a qualified tax professional. State rules vary; always confirm specific requirements with the applicable state revenue department or your tax advisor.