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North Carolina Sales Tax 2022 for Businesses: A Complete Guide

“The sales tax for businesses in North Carolina is 4.75%”

What Does The North Carolina Sales Tax For Businesses Mean?

When you offer taxable goods or services, you function as an agent for the state of North Carolina, collecting tax from customers and remitting it to the proper tax authorities. Tax collection in North Carolina is handled by the North Carolina Department of Revenue (NCDOR). The state of North Carolina owns any sales tax received from customers, not you. It is your job to keep track of the taxes you collect in order to comply with state and municipal regulations. Penalties and interest charges may be imposed if this is not done.

How Much Is The North Carolina Sales Tax For Businesses?

North Carolina has a 4.75 percent state sales tax and allows local governments to collect a 2.75 percent local choice sales tax. There are 460 local tax jurisdictions in the state, collecting an average of 2.22 percent in local taxes. The highest sales tax rate in North Carolina is 7.5 percent in the cities of Durham, Durham, Chapel Hill, Wake Forest, and Durham when combined with the state sales tax (and fourteen other cities).

North Carolina Sales Tax

Threshold Limit

4.75%

$100,000 economic sales threshold limit and 200 transaction threshold limit

Do You Need To Collect Sales Tax In North Carolina For Your Ecommerce Business?

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Sales tax is levied in North Carolina on the sale of tangible items and some services. The vendor is responsible for collecting the tax and remitting it to the appropriate state tax authorities. Therefore, the seller serves as a de facto collector.

Start by completing the following three questions to see if you need to collect sales tax in North Carolina:

  • Have you established a nexus in North Carolina?
  • Are you selling taxable goods or services to residents of North Carolina?
  • Do your customers have to pay sales tax?

Upon answering yes to all three questions, you need to register with the state tax authorities, collect sales taxes per transaction, file returns, and remit the money to the state.

Therefore, this is what the North Carolina sales tax for businesses is all about. Now, the question arises: what types of goods and services are taxable under North Carolina sales tax? Let’s see.

Read More: South Carolina Sales Tax 2022 For Businesses: A Complete Guide

What Types Of Goods And Services Are Taxable Under North Carolina Sales Tax?

Transactions

Sales tax is constitutionally required to be collected from any tangible, physical things sold to a consumer in the state of North Carolina. Prescription pharmaceuticals, certain types of groceries, some medical gadgets, and machinery and chemicals used in research and development are all examples of things that are free from North Carolina sales tax.

Thus, a person who sells school supplies and books in North Carolina must charge sales tax, but a person who runs a grocery store doesn’t have to charge sales tax on everything it sells.

Traditional Goods and Services

Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in North Carolina.

Prescription drugs, groceries, and gasoline are all excluded from paying taxes.

Digital Goods and Services

Anything that is provided electronically, such as an album downloaded from iTunes or a video purchased from Amazon, is considered a digital good or service.

Businesses in North Carolina are required to collect sales tax on digital goods and services.

Other Services

Services are not normally considered taxable in the state of North Carolina. For example, a service that involves developing or manufacturing a product is very certainly taxable, and you will almost certainly be required to pay sales tax on the service.

Therefore, if you deal in any of these goods and services, you are subject to pay sales tax in North Carolina. Now let’s move on to see the tax collection and tax filing procedure in North Carolina.

Tax Collection

You’ll need to figure out how much sales tax to charge different clients after you receive your seller’s permit and start your business. In order to avoid fines and potential audits, it is crucial for business owners to collect the correct sales tax rate.

You must account for the following types of purchases when calculating sales tax:

  • Store Sales- Calculating sales tax for traditional business owners selling goods or services on-site is simple: all sales are taxed at the rate determined by the store’s location.
  • In-State Sales- The state of North Carolina has a sales tax regime known as destination-based. This means long-distance sales within North Carolina are taxed based on the buyer’s address. This regulation applies to sales taxes collected by the state, county, and city.
  • Out-of-state Sales- Businesses with nexus in other states are only required to pay sales tax on out-of-state transactions. The term “nexus” refers to a company’s physical presence in another state. 

Tax Filing

You’re ready to file your sales tax return now that you’ve applied for your North Carolina seller’s permit and learned how to charge the correct amount of sales tax to all of your clients. You avoid penalties and fines and make sure to meet all filing dates.

Businesses in North Carolina are required to file sales tax forms and make sales tax payments online.

How often do you need to file a sales tax return in North Carolina?

The frequency with which you must file is determined by the total amount of sales tax your company collects.

  • Quarterly filing- If your firm collects less than $100 in sales tax each month, you should file quarterly returns with the secretary of state’s permission.
  • Monthly filing- If your company receives more than $100 in sales tax every month, you should file your taxes on a monthly basis.

What Happens If You Don’t File The Tax Return By The Due Date?

Filing Deadline

The deadline for all sales tax returns in North Carolina is the 30th of the month unless it is a weekend or federal holiday, in which case it is moved to the next business day.

Late Filing

Late filing of a North Carolina sales tax return can result in a penalty as well as interest on any unpaid tax. See our section on fines and interest for additional details.

The NCDOR may give you an extension if you miss a North Carolina sales tax filing deadline due to circumstances beyond your control (e.g., weather, accident). You may, however, be required to present evidence to back up your allegation.

Penalties and Interest

North Carolina assesses a late filing penalty of 5% every month or partial month, up to a maximum of 25% of the tax stated on the tax return.

In addition, North Carolina imposes a late payment penalty of ten percent of the unpaid tax.

Need Assistance With North Carolina Sales Tax

Our staff at Freecashflow.io is committed to assisting internet entrepreneurs with tax and accounting issues. Our firm has worked with multibillion-dollar companies such as Warner Brothers, Ernst & Young, and Paramount Pictures. You may rely on us for tax and accounting assistance. If you have any queries or issues, please do not hesitate to contact us.

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