Most businesses starting in Texas selling a product or offering certain services need to register for a Texas sales tax permit. This is also called a seller’s permit, sales tax license, sales tax number, or sales tax registration.
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: Texas Startup Checklist
Who needs a sales tax permit in Texas?
A business must register for a sales tax permit in Texas when:
- Selling, leasing, or renting tangible personal property in Texas;
- Sell taxable services in Texas; or
- A remote seller or an out-of-state business selling over $500,000 of products and services to Texas residents.
What products and services are taxable in Texas?
Physical products
There are a few exceptions, but almost all physical products are taxable when sold at retail in Texas. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Most food and health-related items are tax-exempt in Texas, in addition to certain goods used for manufacturing.
Digital Products
Digital products are taxable, provided the same item is taxable in the physical format, such as books, movies, and music.
Services
Most services aren’t taxable in Texas, however, there are a few exceptions, some of which include:
- Short-term lodging
- Amusement services such as movie theaters, sporting events, bowling alleys, health clubs, golf courses, etc.
- Personal property maintenance, remodeling, or repair services such as appliance repair, jewelry repair, dog grooming, etc.
- Taxable labor includes photography, artwork, sewing and tailoring, catering, assembling products, etc.
The Comptroller of Public Accounts has a guide on what services are taxable in Texas.
How to register for a sales tax permit in Texas
A sales tax permit can be obtained by registering through the Texas Online Sales Tax Registration Application System or mailing in the Sales and Use Tax Permit Application (AP-201 Form).
A separate permit is required for each location.
Information needed to register includes:
- Type of business entity: sole proprietorship, partnership, corporation, Limited Liability Company (LLC)
- Texas corporation’s file number from the Texas Secretary of State (only corporations or LLCs)
- The legal name of the business
- Federal Employer Identification Number (FEIN) with the IRS. Will use the SSN if the entity is a sole proprietorship with no employees
- Name, addresses, phone number, social security number, and tile of owners/officers/members
- Physical address and mailing address
- Whether the business is home-based
- Expected monthly taxable sales
- North American Industry Classification System (NAICS) code
When registering for a sales tax permit in Texas, the phone number listed in the application will be listed on the state database. There will be a lot of calls from telemarketers, so consider getting an additional phone number to cut down on these calls!
Sales tax reporting
How is sales tax collected?
When a business sells taxable items or services, it charges the customer the appropriate sales tax rate. The business collects this tax and sends it to the Texas Comptroller of Public Accounts.
How much is sales tax in Texas?
If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale occurred in Texas. In addition to the statewide sales tax, cities, counties, special-purpose districts, and transit authorities may add additional sales taxes. When shipping in-state, the sales tax is based on the purchaser’s address.
To find sales tax rates, see the sales tax rate locator from the Texas Comptroller of Public Accounts.
When are Texas sales tax returns due?
The Comptroller of Public Accounts will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually. Generally, a business selling over $8,000 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.
A filing indicating no sales is still required even if the business had no sales during the reporting period.
Texas Sales Tax Permit FAQs
How much does a Texas sales tax permit cost?
There is no cost for a sales tax permit in the state of Texas; however, some businesses are required to post a security bond.
How long does it take to get a Texas sales tax permit?
When filing online, expect 2-3 weeks for the sales tax permit to be processed and up to 4 weeks when submitting it by mail.
Do you have to renew the Texas sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. However, if any information about the business changes, such as the mailing address, additional locations, or change in ownership, it must be updated with the Comptroller of Public Accounts.
How do I get a wholesale license in Texas?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or supplier 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. In many cases, they require the reseller to fill out a Texas Resale Certificate (also referred to as a wholesale license, seller’s permit, or sales tax exemption certificate) to document that the items being purchased are for resale.
Is a business license the same thing as a sales tax permit?
No – A business license and a sales tax permit are not the same thing. Here’s how they differ:
A business license gives you the right to operate your business in a specific area, while a sales tax permit allows you to collect sales tax from your customers on behalf of the state.
In many cases, a business will need both.
If you have questions about the sales tax permit, the Texas Comptroller of Public Accounts has a sales and use tax guide, or they can be contacted by calling 800-531-5441 ext 3-0925 or emailing sales.applications@cpa.texas.gov.
