Updated – Originally published February 5, 2025
Staying compliant with sales tax requirements is crucial for any business. Yet when you’re building or scaling a company, sales tax registration is often one of the first things to fall off the radar. With every state managing its own rules and terminology, it’s no wonder so many business owners feel lost.
This guide breaks down the essentials—what a sales tax license is, who needs one, when to register, and how to stay compliant across multiple states.
What Is a Sales Tax License (and Why It Matters)
A sales tax license—also called a sales tax permit, seller’s permit, or retail license—is the document that allows a business to legally make taxable sales and collect sales tax. Put simply, a sales tax license is required for businesses that collect and remit sales tax.
You must obtain this license before collecting tax in a state. The license acts as proof that your business is authorized to collect and remit sales tax on behalf of the state, and in many states, it must be visibly displayed.
Failing to secure the correct permit can result in serious issues, including fines, penalties, and even personal liability for unremitted tax.
Who Needs a Sales Tax License?
Any business with nexus—a taxable connection to a state—must have a valid sales tax license in that state. Because each state defines nexus differently, staying up to date is essential.
Most businesses establish nexus in one of the following ways.
Physical vs. Economic Nexus Explained
Physical nexus includes having:
- A physical office, storefront, warehouse, or facility
- Inventory stored in the state (including through fulfillment partners)
- Employees or contractors working there
Economic nexus is triggered when your business exceeds certain economic thresholds—commonly:
- $100,000 in annual sales, or
- 200 transactions in the state
Thresholds vary by state, so monitoring your activity matters.
Online Sellers and Remote Businesses
Online-only businesses often assume they’re exempt—but that’s no longer the case.
You may need to register for a sales tax license even without a physical presence if you sell into a state and meet its economic nexus rules.
Marketplace facilitators with nexus must also be licensed and may be required to collect and remit sales tax on behalf of third-party sellers.
Occasional or Temporary Sales Permits
Some states require permits even for limited or short-term activity.
For example:
- Texas and others offer occasional or temporary sales tax permits for pop-up shops, events, or seasonal sales.
- This requirement can apply even if you don’t otherwise have nexus.
When and Where to Register for a Sales Tax License
Once you confirm you have nexus, you must register for a sales tax license—and in most states, the clock starts immediately. States generally expect businesses to register as soon as nexus is established, not at the end of a tax year.
Where to register:
- Each state manages sales tax licensing through its own Department of Revenue or tax agency.
- Businesses with multistate nexus need separate licenses for each state.
Five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—do not impose statewide sales tax, so no standard sales tax license is required there (though Alaska has local taxes that may require separate permits).
How to Apply for a Sales Tax License
The application process varies by state, but the steps are similar everywhere. Most states strongly encourage or exclusively offer how to register online options.
General Steps to Apply Through Your State’s Department of Revenue
- Identify the correct agency
Typically the state’s Department of Revenue or Taxation. - Gather required business details, including:
- Business name, address, and description
- Owner names and contact information
- Federal Employer Identification Number (EIN)
- State tax ID number
- Banking information
- NAICS codes (in some states)
- Estimated annual sales in that state
- Complete the application
Forms are almost always available online, though paper options may exist. - Submit and wait for approval
Processing may take up to four weeks. Businesses cannot collect tax in that state until the license is issued. - Display the permit once approved
Most states require physical posting at retail locations; remote sellers may have different obligations.
How Much Does a Sales Tax License Cost?
Sales tax license fees by state vary widely. Some are free. Others charge a small fee.
Examples:
- Free: Many states, including Florida and Washington
- Low cost: Some states charge nominal processing fees
- Highest: Connecticut charges approximately $100
Licenses may last indefinitely (as in California and Texas) or require renewal every one to four years.
State-by-State Sales Tax License Requirements
Every state has its own rules, forms, renewal timelines, and agency structures. Requirements depend on:
- Whether the state taxes the business or the consumer
- Nexus definitions
- Whether the state offers temporary, wholesale, or marketplace-specific licenses
For more tailored guidance, refer to our state-specific resources, such as:
- Sales Tax in Florida
- Sales Tax in Texas
- Sales Tax in California
Each of these pages dives deeper into registration requirements, renewal cycles, and state thresholds.
Displaying and Renewing Your Sales Tax Permit
Most states require the sales tax permit to be displayed publicly at any physical retail location. Remote sellers may need to meet different notification requirements.
Renewal rules also vary:
- No renewal required: California, Texas, and a handful of others
- Renewal every 1–4 years: Most other states, typically via a short online form
If your nexus in the state lapses, you may not need to renew—but make sure to formally close the account with the state to avoid unnecessary filings.
Stay Compliant with Sales Tax Registration
Managing sales tax across multiple states isn’t simple—and mistakes can be costly. Whether you’re expanding into a new state or cleaning up past registrations, getting expert support can save time, money, and stress.
Contact The Sales Tax People to help you register for a sales tax license in any state and build a streamlined sales tax system tailored to your business.
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