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Selling products or services

  1. You may be required to collect sales tax on the products or services that you sell. For example, if you sell items at a retail store or food establishment, or perform services such as auto repairs, pool cleaning, or lawn care, you must collect sales tax from your customers. For more information:
     
  2. Most products and certain services are subject to sales tax. However, you may be able to purchase certain items, such as inventory that you intend to resell, without paying sales tax.
     
    Some of your sales may be exempt from sales tax. Generally, these exemptions from sales tax are established with sales tax exemption certificates. However, some exemptions (for example, those for food, drugs, and medicine) do not require an exemption certificate. For information on who and what is exempt from sales tax and whether or not an exemption certificate is required, see Quick Reference Guide for Taxable and Exempt Property and Services (TB-ST-740). 
     
  3. To legally make taxable sales, or to issue or accept most sales tax exemption certificates, you must have a Certificate of Authority from the Tax Department. This certificate proves that your business is registered for sales tax purposes. In general, you must apply for a Certificate of Authority at least 20 days before you intend to do any business that requires you to collect sales tax, or issue or accept exemption certificates. To apply:
     
    • See Register as a sales tax vendor.

      If your business makes taxable sales before receiving a Certificate of Authority, you may be subject to a penalty of up to $10,000.
       
  4. Once you have your Certificate of Authority, you must send in your sales tax returns and pay any tax due on time. Generally, we must receive your tax return within 20 days after the end of the tax period. Even if you don’t owe any tax, you still have to file a return.
     
    • You can file sales tax returns and make your payment electronically by creating an Online Services account. Simply create a business account, report your tax information online, and make a payment directly from your bank account. Most vendors are required to use Sales Tax Web File.
       
  5. Sales tax rates vary by locality. To determine the proper amount of sales tax to collect, see Jurisdiction/Rate Lookup by Address. If you make taxable  sales in more than one location, you must determine the proper sales tax rate to collect for each location.
     
  6. In addition to your regular recordkeeping requirements, if you collect sales tax you must keep the following detailed records:
     
    • the amount of sales tax collected, if any, on your sales
    • the amount of each sale along with a copy of any written sales slip, invoice, or receipt that you give your customer
    • the amount of any subsequent return or credit related to a sale
    • the jurisdiction (locality) where you made the sales or deliveries
    • all exemption certificates from your customers for any tax-exempt sales you made
    • copies of your exemption certificates for any tax-exempt purchases you made
    • a daily record of all cash, debit, and credit sales

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