Ohio Sales Tax Guide

Ohio, the Buckeye state, is undeniably a place of many great American inventions and innovations. Such critically important inventions as the ambulance, the traffic light, the cash register, and even the pop-top lid all originally came out of Ohio. Also from Ohio? A little-known historical figure you may have heard of: Thomas Edison! Perhaps that is why, in 1879, Cincinnati became the first city in the world to be lit by electricity. If you’re one of the many small business owners keeping Ohio lit today, you’re going to want to be sure your business complies with Ohio's sales tax laws. Worry not! We have assembled this all-in-one guide for sales tax so that you can meet the sales tax compliance requirements for a small business in Ohio. 

After reading this guide, you will have learned:

• How to be prepared for your call with the Ohio Department of Taxation.
• How to contact the Ohio Department of Taxation.
• When to charge sales tax in Ohio.
• What goods, products, and services are taxable in Ohio.
• When you establish a sales tax nexus with the state of Ohio, and the nuances of various thresholds.
• How to register for a sales tax license in Ohio.
• How to collect sales tax in Ohio.
• How to file and pay sales tax in Ohio.

If, after reading, you still have any questions to help you determine your tax sales obligations in Ohio and how to fulfill them, we are here for your small business bookkeeping needs! 

Ohio Sales Tax Contacts

✅  Do you need to get in touch with the Ohio Department of Taxation?

✅  Are you uncertain about whether to visit, call them, or contact them through their website?  

✅ Do you wonder what information you should have ready before you contact them?

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The Ohio Department of Taxation is reachable by phone at (888) 405-4089. 

You can also visit their single taxpayer service center or send them a message. If you are hoping for the fastest response, we always suggest that you call rather than visit in person. 

When you do call the Ohio Department of Taxation, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

• Taxpayer Name
• EIN
• Sales & Use Tax ID Number

If you plan on having a third party contact them on your behalf, you’ll want to be sure to have completed a power of attorney form (TBOR1, PDF). If you don’t have a completed form they won’t be able to assist someone else on your behalf.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

Ohio Sales Tax Registration

Are you a new business selling tangible property in Ohio? If yes, you are going to want to register your business with the Ohio Department of Taxation so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

Here we go! Remember...

Preparation is key. 

Let’s get started!

How do I register to collect sales tax in Ohio?

You can apply or register for an Ohio sales tax permit by visiting the Ohio Business Gateway and following the instructions provided.

Ohio does offer an old school paper based form (PDF) you can print and mail in, but this is going to be a slower setup (six weeks!) and with greater possibility for errors. We don’t recommend it, and Ohio discourages it on their website, but we wanted to make the option available in case it suits the needs of someone out there. 

What information do I need to register for an Ohio sales tax permit?

Great question!

Before you sign up for Ohio sales tax permit you’ll want the following information on hand:

• Business name
• Business entity type 
• Description of business activities
• Date business activities began or will begin
• Business address and mailing address
• Business contact information
• Associated business entities 
• NAICS code that best matches the business
• Federal Employer Identification Number (FEIN)
• List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Ohio Business Gateway. 

How much does it cost to register for an Ohio sales tax permit?

For businesses located within Ohio the fee is $25 to register a new tax permit. Out-of-state businesses who must register due to economic nexus do not have to pay a fee.

Do I need a Federal Tax ID Number or EIN to register for an Ohio sales tax permit?

Quite right! You will most assuredly need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

Which agencies in Ohio do I need to additionally register with?

You may need to check with some of the following agencies or resources: 

• Ohio Department of Commerce
• TechOhio
• Ohio Secretary of State

You’ll want to give this some thought and do a little research or investigating; since every business is unique, and there are such different rules, regulations, and laws that may apply. 

We suggest contacting the Ohio Department of Taxation to verify which additional government agencies you may be required to register with. 

*****

Huzzah!!!

You are now prepared to register for your Ohio sales tax permit in Ohio. 

Let’s summarize what we have covered:  

• Have all the required information easily accessible before registering online.
• Acquire a tax ID or EIN before registering for an Ohio sales tax permit.
• Register online at the Ohio Business Gateway website.
• Look into what other agencies you may have to additionally register with.

Registering for your Ohio sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

Ohio Sales Tax FAQ 

By now, you may have already contacted the Ohio Department of Taxation and applied for an Ohio sales tax permit. 

Once you have a license to collect and remit sales taxes in Ohio, you will probably be asking yourself two questions: 

• When do I charge a sales tax in Ohio?

• What goods and services are subject to sales taxes in Ohio? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

What goods and services are considered taxable in Ohio?

The following items are all taxable in the state of Ohio: 

• Sales of tangible goods at retail.
• Repairs or alterations of tangible personal property.
• Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
• Selling service warranty contracts.
• Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
• Rental/lease of personal goods (e.g.: machinery, vehicles, equipment, or other property).
• Charges for admission to any place of amusement, sport, or recreation.
• Manufacturing or producing goods for retail sales.
• Operating vending machines or amusement rides.
• Services are mostly exempted (janitorial services are taxed)

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

*****

Let’s now review some of our clients’ frequently asked questions:

• Is Ohio an Origin or Destination sales tax State?

• What creates a sales tax nexus in Ohio?

• What is the economic threshold in Ohio?

• Does Amazon have fulfillment centers in Ohio?

• Does Ohio have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

Is Ohio an origin or destination-based sales tax state?

Ohio is an origin-based sales tax state. This means you charge sales tax based on the location of the business rather than that of the purchaser. This should be relatively straightforward to configure in any Point-of-Sales system.

 Protip: Charge sales tax based on your business location rather than the buyer’s

What creates sales tax nexus with the state of Ohio?  

Having nexus, also known as "sufficient business presence,” with Ohio means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Ohio because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Ohio Department of Taxation even if you never step foot in Ohio.   

So, how do you create Sales tax Nexus in Ohio?

A business establishes a nexus in Ohio by:

• having a business location in Ohio;
• having property stored in Ohio;
• employing any person in Ohio;
• contracting with a salesperson or other agent in Ohio;
• leasing equipment used in Ohio;
• performing services in Ohio;
• licensing the use of intangible property in Ohio, or transporting property in Ohio using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored, such as in the instance of an Amazon warehouse. 

Does Amazon have fulfillment centers in Ohio?

Yes, there are three at this time:

• 6050 Gateway Court // Obetz, OH // 43125-9016 
• 11903 National Rd SW // Etna, OH // 43062 
• 3563 Interchange Rd // Columbus, OH //43204 

This is relevant if you sell your products on Amazon or are recognized as an Amazon FBA (Fulfillment by Amazon) seller. When Amazon stores your products in one of its fulfillment centers in any state, including Minnesota, this triggers a sales tax requirement. If Amazon is storing your products in a warehouse in Minnesota, you have created a taxing connection with the state of Minnesota.

We can help guide your small business through this! We use tools like A2X and Wherestock to identify where our clients' inventory is currently being held and shipped from so that we can keep them in compliance.

Does Ohio have economic nexus?

Yes, Ohio does now have an economic nexus law. As of August 1st, 2019, remote sellers are liable to pay sales tax beyond a certain threshold. This means that even businesses without a physical presence or traditional nexus can be required to register for, collect, and pay sales taxes.

The threshold for registering is having a cumulative gross revenue of over $100,000 or 200 transactions in a year to Ohio purchasers.

For  more information see the Ohio DOT’s remote sellers page here.

Does Ohio have click-through nexus?

Yes! This means if you’re an affiliate sales or third party marketer, you may have a tax liability even if you don’t meet nexus another way. If revenue exceeds $10,000/quarter four quarters in a row, affiliate marketers will need to register for and pay sales tax. For more information, check out this page about click-through nexus.

Is Ohio a streamlined sales tax state?

Yep! Since October, 2005 Ohio was an associate member and on Jan 1, 2014 became a full member of Streamlined Sales Tax.

If you are planning on taking advantage of the Streamlined Sales Tax as a business, it is recommended you use a Certified Service Provider though businesses may opt to register themselves without a CSP. Ultimately the aim of streamlined sales tax is to simplify payment to multiple different states of sales and use tax. It isn’t required that you utilize them, but it can significantly reduce complexity to do so, especially if your business sells in multiple states.

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Ohio.

Collecting Sales Tax in Ohio

By now you know if you are a business that has established a nexus with Ohio. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their Ohio Sales Tax obligations. 

• How do I collect Ohio Sales Tax?
• Who is eligible for Ohio Sales Tax exemptions?
• What should I do if my customer is exempt from sales tax in Ohio?
• What happens if I lose an Ohio nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Ohio.

How do I collect Ohio Sales Tax?

Because Ohio is an origin-based sales tax state, your business should charge sales tax at the time of the transaction based on the business location rather than that of the purchaser. This is usually as simple as configuring the Point-of-Sales system accordingly. In Ohio, cities may add additional tax, so be sure to check if your city does! :] 

What are the current Ohio Sales Tax rates?   

Ohio’s state-wide sales tax rate is 5.75% at the time of this article’s writing, with various local surtaxes adding to that amount. Since sales tax rates may change, and do vary based on location, we advise you to check out the Ohio Department of Taxation tax rate lookup page. Any change will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

What is exempt from Ohio Sales Tax?

• Purchases for resale
• Everyday clothing items
• Medical supplies
• Groceries 

Ohio has many more exemptions, which they list on their website.

Who are eligible for Ohio Sales Tax exemptions?

At this point, you should know what products are exempt from sales tax in Ohio. You also want to know who may be exempt. 

Under Ohio law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

• Government agencies
• Non-profit organizations
• Religious groups
• Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit status doesn’t instantly confer tax exemption.

What should I do if my customer is exempt from sales tax in Ohio?

Purchasers who are tax exempt must have completed resale certificate (PDF) and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Remember, you always want to collect and file a copy of the exempt certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.

What happens if I lose an Ohio Sales Tax exemption certificate?

Hmm... Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer! That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care with your paperwork… which happens to be one of our specialties! :) 

Does Ohio have a sales tax holiday?

Yes! The first Friday-Sunday in August Ohio has a Back to School tax holiday during which certain essential items like clothing and school supplies are exempt from tax.

***** 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in Ohio state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

Filing and Paying Sales Tax in Ohio

It is time to talk about filing and paying your sales taxes in Ohio. In this section, We are going to cover the following frequently asked questions from our clients:

• When is Ohio Sales Tax due?
• What are the Ohio Sales Tax thresholds?
• What if an Ohio Sales Tax filing date falls on a weekend or holiday?
• How do I file an Ohio Sales Tax Return?
• How do I correct an Ohio Sales Tax return?
• What happens if I don’t collect sales tax?
• What happens if I file or pay my sales tax return late?
• Do I need to file a return if I don’t collect any sales tax in Ohio?
• If I close my business, do I need to file a final sales tax return?
• Does the Ohio Department of Taxation offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your Ohio Sales Tax.

When is Ohio Sales Tax due?

Ohio sales tax payments are due based on the filing interval. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] 

The state of Ohio requires payment by no later than the 23rd day of the month following the reporting period

What are the Ohio Sales Tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

*anticipated if new business, actual if existing company

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of Ohio so that you don't miss any shift in deadlines.

What if an Ohio sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

How do I file an Ohio sales tax return?

Paper: No paper form to file and pay in Ohio! Progress :) They do, unusually, offer a Telefile phone number: (800) 697-0440

Electronic: File online via Ohio Business Gateway and submit payment via EFT.

How do I correct an Ohio Sales Tax return?

Paper: Unavailable

Electronic: Amend the return within the Ohio Business Gateway

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

What happens if I file or pay my sales tax return late?

Ohio's Department of Taxation charges a penalty ranging from 10% up to a maximum of $50 of the tax owed, depending on how late. Additionally, interest may be charged additionally on late payments.

Do I need to file a return if I don’t collect any sales tax in Ohio?

Yep! Ohio requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

If I close my business, do I need to file a final sales tax return?

Absolutely, Ohio requires businesses to file a “Final sales tax” return when closing their doors.

Does the Ohio Department of Taxation offer a discount for filing on time?

Yes, though quite a paltry one. Ever get a raise so small it felt insulting? Ohio’s discount for early filing is .0075%. Yes, that’s .75 of 1% :D  We won’t fault you if that doesn’t have you leaping out of your chair.

*****

Now that we have covered all our bases for filing and paying sales taxes in the state of Ohio, you should feel more at ease about the process.

Some things to remember:

• Due dates are important. If anything, file and pay your taxes early.
• There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
• You can file and pay your taxes electronically or by mail
• If you need to amend a return, you may do so electronically or by paper.
• If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of Ohio.
• You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
• Even if you collect no sales tax, you still need to file a return.
• You need to file a “Final sales tax report” when you close your business.

Now, you are ready to file and pay your sales tax in Ohio. If you have any more questions, feel free to contact us.

Please note: This blog is for informational purposes only and the information is accurate as of 9/21/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.