“The sales tax for businesses in Indiana is 7%”
What Does Indiana Sales Tax For Businesses Mean?
Indiana’s sales tax system is rather straightforward, consisting of a flat state tax rate plus county and local city taxes, which vary greatly depending on which jurisdiction you’re in. Local taxes on restaurant food and beverages are also common in many areas.
To compensate for tax revenue lost due to statewide property tax reform, Indiana’s sales tax was raised to its present level in 2008. The sales tax revenue is typically utilized to fund local economic development and tourism projects. The Indiana Convention Center and Lucas Oil Stadium, for example, were both funded by sales tax proceeds.
How Much Is The Indiana Sales Tax For Businesses?
The statewide sales tax rate in Indiana is 7%, and it has been in existence since 1933.
Municipal governments in Indiana can also levy a local-option sales tax, which can range from 0% to 0% across the state, with an average local tax of N/A. (for a total of 7 percent when combined with the state sales tax).
|Indiana Sales Tax||Threshold Limit|
|7%||$100,000 economic sales threshold limit and 200 transaction limit|
Do You Need To Collect Indiana Sales Tax For Your Ecommerce Business
You must collect sales tax if you have a nexus in Indiana. When it comes to nexus, vendors may be geographically or economically related to a state. Physical nexus is defined as having sufficient physical presence or activity in a state to justify paying sales tax there. An economic nexus occurs when the state’s total income or transaction volume exceeds its economic threshold.
Therefore, this is what the Indiana sales tax for businesses is all about. Now the question arises: what types of goods and services are taxable in Indiana? Let’s see.
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What Types of Goods and Services Are Taxable In Indiana?
The first step in sales tax compliance is determining if the products or services your company sells are taxable in Indiana.
Traditional Goods or Services
Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in Indiana.
Groceries and prescription medications are tax-free purchases.
Digital Goods or Services
Electronically provided items, such as albums from iTunes or videos from Amazon, are considered digital goods or services.
Businesses in Indiana are required to collect sales tax on the sale of digital products and services.
Therefore, if you are dealing in any of these goods or services you are subject to pay sales tax in Indiana. Now let’s move on to see the tax collection and tax filing procedure in Indiana.
After you receive your seller’s permit and open your business, you will need to figure out how much sales tax to charge different clients. Keeping the correct sales tax rate is essential for business owners to avoid costly fines and audits.
For sales tax calculations, the following types of purchases must be taken into account:
- In-state Sales- In Indiana, calculating sales tax on products sold is simple. Simply apply a fixed sales tax rate of 7.000 percent to all things, whether you’re selling at a store or delivering across the state.
- Out-of-state Sales- A business with nexus in another state is only required to collect sales tax on transactions outside of that state. “Nexus” is the physical presence of a company in another state.
You’re ready to file your sales tax return now that you’ve applied for your Indiana seller’s permit and learned how to charge the correct amount of sales tax to all of your clients. You avoid fines and penalties by meeting all deadlines.
Businesses in Indiana are required to file sales tax forms and make sales tax payments online.
How often do you need to file the Indiana sales tax return?
According to the total amount of sales tax your company collects, you are required to file frequently.
- Annual reporting- If your company receives less than $25 in sales tax every month, you should choose to file returns on an annual basis.
- Filing once a month- If your company receives less than $1000 in sales tax per month, you should file returns on a monthly basis.
- Filing Early- If your company collects more than $1000 in sales tax per month, you should consider becoming an early filer. The responsibility of an early filer is to file their tax return 10 days earlier than a monthly filer:
This corresponds to 20 days after the due date versus 30 days after the due date.
What If You Do Not File The Sales Tax Return Before The Due Date?
Unless it’s a weekend or a federal holiday, all Indiana sales tax returns are due on the 20th of the month. If it’s a weekend or a federal holiday, the deadline is pushed out to the next working day.
Penalty For Late Filing
If a firm fails to file its return or underpays the amount provided by the tax return, Indiana imposes a late filing/payment penalty of 10% of the tax payable on the return.
If a firm does not submit its tax return within 30 days after the state provides them a notice to do so, Indiana imposes a non-filing penalty equivalent to 20% of the unpaid tax. Once this penalty is imposed, it is the sole penalty that the company will face.
For any unpaid tax or penalty, the state levies an interest rate of 3.0 percent per year or 0.25 percent every month or partial month.
Need Assistance With Indiana Sales Tax
If you have any questions about the Indiana Sales Tax in 2022, please contact us at any time. FreeCashFlow is a tax and accounting firm in Los Angeles, California, with over 20 years of experience. With our tax and accounting services, we will be able to provide you with the finest possible service.