Most businesses starting in Minnesota selling a product or offering certain services will need to register for a Minnesota sales tax permit. This permit can also be referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.
The sales tax permit is obtained through the Minnesota Department of Revenue as a part of applying for a Minnesota Business Tax ID Number.
Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Related: Guide to starting a business in Minnesota
How to register for a sales tax permit in Minnesota
A sales tax permit can be obtained by registering for a Minnesota Tax ID Number.
Information needed to register includes:
- Federal Employer Identification Number (FEIN) from the IRS or the owner’s Social Security Number if a sole proprietorship with no employees
- Type of business entity: sole proprietorship, general partnership, corporation, Limited Liability Company (LLC)
- The legal name of the and/or DBA name
- Business Address
- North American Industry Classification System (NAICS) code
- Names, addresses, and social security numbers of owners/officers/members
- Date business activities began or will begin
- Projected monthly sales
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business, which is then sent to the Minnesota Department of Revenue.
How much sales tax is charged?
If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale took place in Minnesota. In addition to the statewide tax, cities, and municipalities may add local sales taxes. When shipping in-state, the sales tax is based on the purchaser’s address.
To find Minnesota sales tax rates, see the sales tax rate calculator.
When are Minnesota sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually. Generally, a business collecting over $500 each month will file monthly.
Filings are due on the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which would move to the next business day.
Even if the business had no sales during the reporting period, a filing indicating no sales is still required.
Minnesota Sales Tax Permit FAQs
Who needs a sales tax permit in Minnesota?
A business must register for a sales tax permit in Minnesota when:
– A business has sales tax nexus. Nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
– Selling tangible items and/or taxable services in Minnesota
– Hiring employees who work in Minnesota (including remote employees, sales representatives, or agents)
– An online business located in Minnesota selling taxable products to Minnesota residents
– A remote seller who either ships 100 or more transactions to Minnesota residents annually or has 10 or more transactions annually to Minnesota residents totaling more than $100,000
What products and services are taxable in Minnesota?
Physical Products: There are a few exceptions, but almost all physical products are taxable when sold at retail in Minnesota. Common examples include:
– General merchandise like furniture, appliances, and clothing
– Titled or registered items like vehicles
Certain manufacturing and agricultural equipment, baby products, groceries, certain medicines, and medical equipment are also tax-exempt. A list of taxable sales is available from the Minnesota Department of Revenue.
Digital Products: Digital products, with the exception of canned software (pre-made software), aren’t taxable.
Services: Most services aren’t taxable in Minnesota, however, there are a few exceptions, some of which include:
– Short-term lodging
– Admissions and amusement fees (health clubs, spas, golf clubs, movies, etc.)
– Commercial building cleaning and maintenance
– Detective, security, and alarm services
– Laundry, dry cleaning, and alterations services
– Landscaping services
– Massages
– Towing and car detailing
– Pet grooming, boarding, and care services
A full list of taxable services is available from the Minnesota Department of Revenue.
How much does a Minnesota sales tax permit cost?
There is no cost for a sales tax permit in the state of Minnesota.
How long does it take to get a Minnesota sales tax permit?
It takes only minutes to register your seven-digit Minnesota Tax ID Number.
Do you have to renew your Minnesota sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Revenue.
Is a business license the same thing as a sales tax license?
No – A business license and a sales tax permit serve distinct purposes.
A business license authorizes the operation of a business within a particular jurisdiction, ensuring compliance with local laws and regulations. On the other hand, a sales tax permit enables a business to legally collect sales tax from customers, which is then remitted to the state government. Typically, businesses require both a license and a permit to operate fully within the law.
How do I get a wholesale license in Minnesota?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed Minnesota Certificate of Exemption (also referred to as a wholesale license, resale certificate, or sales tax exemption certificate) to document the items being purchased are for resale.
If you have questions about the sales tax permit, the Minnesota Department of Revenue has a guide to sales and use taxes in Minnesota or can be contacted by calling 651-282-5225 or 800-657-3605.
