If you own a business in Utah, you might be unsure about your tax responsibilities. You can specifically be pondering issues like “What is no nexus?” in addition to “Do I have to collect sales tax in Utah?” These issues and others will be covered in this article to provide you a better understanding of your tax responsibilities in Utah as a business owner.
Let’s start by defining “no nexus.” Nexus in the context of sales tax refers to a relationship between a company and a state that gives rise to a duty to gather and remit sales tax. A company must collect and send sales tax on all taxable sales made in a state where it has nexus. A company is not required to collect or remit sales tax in a state where it has no link, nevertheless. As a result, there is “no nexus.”
So how can a company tell whether it has a nexus in Utah? The answer is based on a number of variables, such as the business’s physical presence in the state, the type of sales activities it engages in, and the amount of sales it generates there. In general, a company has nexus in Utah if it maintains a physical presence there, such as a storefront or warehouse, or if it engages in certain sales activities, including selling products at trade shows or through local affiliates.
A company must apply for a tax ID number, often known as a sales tax permit, if it has nexus in Utah. Through the website of the Utah State Tax Commission, this can be done online. All taxable sales made within the state must be collected and remitted by the company once it has been registered. What happens, though, if a company has no nexus in Utah? In this instance, the company is exempt from the requirement to gather or send sales tax on local sales. It is crucial to keep in mind that some states have “economic nexus” regulations that mandate companies collect and send sales tax if their local sales reach specific limits, even if they do not have a physical presence there. Utah won’t have an economic nexus statute until 2021.
Let’s now examine Utah’s sales tax system. Utah levies a 4.85% state sales tax in addition to extra, location-specific local sales taxes. In Utah, the overall sales tax rate can vary from 5.95% to 9.45%. All tangible personal property sold within the state, as well as some services and digital goods, are often subject to sales tax. Nevertheless, depending on the specifics of the transaction, a few exceptions and additional guidelines might be applicable.
In conclusion, it can be challenging to comprehend “no nexus” and your tax responsibilities as a business owner in Utah. It is advised that you speak with a tax expert or get advice from the Utah State Tax Commission if you are unsure whether your company has nexus in Utah or how to apply for a tax ID number.