Self-Employed Individuals and Sales Tax

After paying the additional Self Employment Tax, which is separate from income tax, self-employed individuals may also need to pay sales tax Sales tax is the tax levied at the state level by the [state] government. It is applied to the sale of most goods and some services at the point of purchase. It is the responsibility of the seller to levy the sales tax as per the state’s sales tax rules. PS: You can contact the Agro Accounting CPA tax experts to calculate your sales tax!

Self-Employed People Have to Pay Sales Tax

Different states have different sales tax rates. If a seller is not levying the sales tax on his or her products… It is the responsibility of the seller to pay the sales tax to the government. Simultaneously, if a buyer has purchased goods that are taxable as per the state’s sales tax law, the buyer is obliged to pay the use tax.

What is the Use Tax?

Wikipedia explains ‘use tax’ as a type of tax levied in the United States by numerous state governments. It is essentially the same as a sales tax but is applied not where a product or service was sold but where a merchant bought a product or service and then converted it for its own use, without having paid tax when it was initially purchased. So, in short, if you have purchased an item that was taxable, then you have to pay sales tax on it one way or another.

How to Calculate Sales Tax

To calculate sales tax, you have to know about your state’s sales tax rate(s). There are also other terms and conditions that make this a rather complex task. You can take the help of professional income tax services for the self-employed to manage your sales tax. California has the highest base state sales tax rate at 7.25%.