Texas Sales Tax for Small Businesses: Permits, Filing and Penalties

Who needs a sales tax permit

If you sell, lease or rent taxable goods, or sell taxable services, in Texas, you need a Texas sales and use tax permit from the Comptroller before you start. The permit is free. Many services are taxable in Texas, including some repair, cleaning, data processing and information services, so check before assuming you're exempt.

How the rate works

The state rate is 6.25%. Cities, counties, transit authorities and special districts can add up to 2% more, for a maximum combined rate of 8.25%. The rate you charge depends on where the sale happens, generally your place of business for in-store sales and the customer's location for some deliveries. The Comptroller's sales tax rate locator shows the rate for any address.

Filing and paying

• The Comptroller assigns a filing frequency: monthly, quarterly or yearly, based on how much tax you collect
• Returns and payment are due by the 20th day of the month after the reporting period
• File a return even if you had no sales for the period
• Filing and paying on time earns a small timely filing discount on the tax you collected
• Keep exemption and resale certificates for any sale you didn't tax

Late penalties

Late returns carry a $50 penalty, plus 5% of the tax due if it's 1 to 30 days late and 10% if it's more than 30 days late. Interest starts on tax that's more than 60 days late. Because sales tax is money collected from customers, the Comptroller treats unpaid balances seriously and can hold owners and officers personally responsible.

Use tax

If you buy taxable items for your business from a seller that didn't charge Texas tax, such as an out-of-state supplier, you generally owe use tax on them and report it on your sales tax return.