As a retailer, it’s a rewarding experience to set up shop in a new place, see new sights and meet new people. If you own a food truck, or travel around to sell at festivals or craft fairs, then you know what I mean.
You probably also know that with business rewards come small hassles, and one of those is dealing with sales tax as your business moves from place to place.
Basics of Sales Tax for Sellers On-the-Go
Most U.S. states have a statewide sales tax rate, but also allow local areas to collect sales tax from buyers. For example, the sales tax rate in Alpharetta, GA is 7% while the sales tax rate in nearby Marietta, GA is 6%.
Product sellers who sell taxable items are generally required to collect sales tax at the point of sale of your product. I’ll use a food truck as an example. If you sit your food truck in a food truck park in Mcdonough, GA and never move it, you would always charge the sales tax rate at that single point of sale (in this case, 7%).
But if you take your food truck on the road and visit both Alpharetta and Marietta, Georgia, then you would be required to collect sales tax at the 7% rate in Alpharetta but the 6% rate in Marietta.
Keep in mind that this only applies to mobile businesses that are selling products. In most states, services are either not taxed or only certain services are taxed. However, this is changing, so if you operate a service-based business you may want to check with your state’s department of revenue or a good CPA to help determine your sales tax liability.
Are your Products Even Taxable?
The examples above only apply if the products you are selling are taxable. As a general rule of thumb, “prepared foods” are taxable. But keep in mind that some states have different definitions of what constitutes prepared foods.
Sometimes where you’re selling the food matters. In some cases, food sold to certain hospitals, libraries, universities or other non-profits or state institutions is not taxable.
You can see what each state’s laws have to say about prepared food here. Remember, this is just a general guideline. Your products may fall into a gray area or your state’s sales tax laws may change, so always consult with a good CPA or your state’s department of revenue should you need specific guidance.
For the most part, however, products sold at retail are taxable, and sellers should charge buyers the correct sales tax rate.
How to Find a Local Sales Tax Rate
To find out the sales tax rate at a location, check out TaxJar’s Sales Tax Calculator, or find local sales tax rates where you stand by going to TaxJar.com/mobile. TaxJar mobile gives you the general sales tax rate that is applicable in almost all cases. Be sure to consider any special tax rates (such as lower sales tax rates on certain foods) when charging your customers.
I hope this general guide has helped you determine how and when to collect sales tax in your mobile business. For more about the basics of sales tax, check out our Sales Tax 101 Guide.
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