What is a State Tax Certificate in North Carolina?
When you run your business out of the state of North Carolina, "sales" and "use" tax must be collected from taxable tangible property. Think of your business as a mini-Internal Revenue Service (IRS). You charge and collect a sales tax on your goods or services, and your North Carolina Tax Certificate allows you to pass on those taxes to your local tax authority.
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Significance
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Retail sales of tangible property are subject to a 5.75 percent "Sales" and "Use" tax, according to the North Carolina Department of Revenue as of 2010. Every person that has a business run out of North Carolina must register with the North Carolina Department of Revenue. The agency must collect the tax due on, "all taxable items--tangible personal property that is sold, delivered for storage, used or delivered, according to dornc.com."
Tax Certificate Application
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Business owners report the "Sales" and "Use" tax they collect on Form E500--Sales and Use Tax Return. Business owner scan call 877-252-4052 to request Form E500 and ask questions about filling out the form. After filling out the application, mail it to North Carolina Department of Revenue, PO Box 25000, Raleigh, NC, 27640-0640. North Carolina business owners can also apply online.
Depending on how the business is set up--sole proprietorship, corporation, limited liability, or partnership. You'll need your Social Security Number or Federal Employee ID Number.
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Fees
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There is no fee to apply for a North Carolina Tax Certificate. After Form E500 is registered, the sales and use taxes collected from consumers are due at the time the business owner is required to file her North Carolina Tax Certificate Report.
Time Frame
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North Carolina business owners file their Tax Report to the North Carolina Department of Revenue monthly, quarterly, or monthly with prepayment. If the sales and use tax collected from your business are consistently less than $10,000 a month, the tax report and taxes due should be filed on or before the 20th of each month for all taxes collected the preceding month.
Businesses collecting less than $100 monthly as verified and approved by the Tax Secretary in sales and use tax in North Carolina file their Tax Report and taxes collected on or before the last day of January, April, July and October for taxes collected for each preceding three month period.
Businesses that collected more than $10,000 a month in state and local sales and use tax must make monthly prepayment. They must pay upfront at least 65 percent of the next month's liability.
Warning
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Businesses that don't make a habit of separating the taxes they collect on behalf of the North Carolina Department of Revenue can quickly get into trouble. Stiff penalties and interest accrue on all tax owned but not filed on time. It's smart to keep your sales tax in a separate bank account. Consider hiring a payroll service that handles electronically filing or mailing your taxes on or before the due date.
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References
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- Photo Credit tax defined image by Christopher Walker from Fotolia.com
