Should I collect sales tax when I sell to a reseller?

No, as long as the reseller can produce a valid reseller certificate before the sale. The certificate is what exempts the transaction from sales tax; without it, you are required to collect.

How do I know which items are taxed?

Each state maintains its own list of taxed items, exemptions, and preferential rates. Some essentials (groceries, medications) are exempt or reduced in many states; some categories (digital services, prepared food) have surcharges. Prodezk's team can run the determination for your specific products.

I have a warehouse in a different state from where my company was formed. Do I need to file sales tax there?

Yes. Under the principle of territoriality, sales tax obligations attach to where merchandise is stored and sold from, not where the company was incorporated. A warehouse triggers a sales tax nexus in that state.

If my business is in one state and I had sales in another, do I need to charge sales tax there?

Possibly. It depends on whether you've established economic nexus in that state (typically a sales-volume threshold) or have a physical presence (warehouse, office, employees). Each state defines its own nexus rules.

Where do the collected resources go?

Sales tax collected from customers is held in trust until your filing period (monthly, bi-monthly, or quarterly, depending on your sales volume), at which point it's remitted to the state's department of revenue.

Sales tax management

Every company in the United States must stay current with its sales tax obligations. For any business that sells to end consumers, it is among the most consequential of the ongoing duties. Handled poorly, the state's department of revenue will in time find you. Handled well, it settles into a quiet, recurring rhythm.

Sales tax is added to the price of taxed goods and services, and the final consumer is charged. Businesses are responsible for collecting it from consumers and remitting it to the state. The frequency of remittance depends on the volume your company collects: typically monthly, bi-monthly, or quarterly, set by each state's department of revenue.

Monthly: high-volume sellers
Bi-monthly: mid-volume
Quarterly: low-volume sellers

Each state also maintains a detailed list of goods and services that are exempt, excluded, or carry preferential rates. The final percentage may also vary depending on the local jurisdiction within the state.

What percentage applies.

Each state has a different sales tax rate, and within most states there are local jurisdictions (cities, counties) that add their own percentage on top. Florida is a 6% state with county additions; California is 7.25% with district add-ons; Tennessee can reach over 9% combined. The state-by-state list is long and changes year to year.

Sales tax sits between you and the state. If you collect it, you're holding their money, and they expect it back, on schedule.

Beyond the rate, each state publishes a list of taxed and exempt categories. Groceries are exempt in some states and taxed in others. Digital services are taxed in a growing number of states. Prepared food is treated differently from raw ingredients. Knowing your category matters as much as knowing the rate.

The principle of territoriality.

Territoriality is the rule that determines which state's sales tax applies. The short version: it's about where the product or service is delivered, and where the merchandise is stored, not where the company was originally incorporated.

A practical example: a company incorporated in Florida that operates a physical store in New York must collect, file, and remit sales tax in New York for sales made there. The Florida formation doesn't insulate the business from New York's sales tax obligations.

The same principle applies to warehouses. If you store inventory in a third-party fulfillment center in another state, you've likely established a sales tax nexus in that state, even without a storefront or employees there.

A card terminal printing a receipt at the point of sale.

Reseller's certificate.

Many businesses buy goods or services for the purpose of reselling them. These businesses can obtain a reseller's certificate, which allows them to acquire inventory free of sales tax, the assumption being that sales tax will be collected when the product is sold to the final consumer.

If you're a reseller, applying for the certificate in each state where you operate is one of the first compliance steps. If you're a seller, asking your business buyers for their certificate before completing the sale protects you from collecting tax on transactions that should be exempt.

Surtax.

A surtax is an additional tax levied on top of an existing business tax. It can have a flat or progressive rate structure. Florida's sales surtax, for example, is added at the county level on top of the state's 6%, so a Miami-Dade sale carries the state rate plus the county surtax, all collected and remitted together.

Knowing whether and where surtaxes apply is part of why filing in multiple states gets complex quickly. Prodezk's team handles the math by jurisdiction so the filing reflects every applicable rate.

Sales tax.