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Sales tax remittance: How to file and pay sales tax

Q: What does it mean when sales tax is remitted?

When sales tax is remitted, your business is submitting to the tax authority the sales tax you collected from purchases.

Q: Is sales tax remitted deductible?

You can deduct local and state sales tax paid throughout the year, which you’ll need to keep track of sales tax expense on purchases and an estimate of what you paid. However, if you decide to deduct state and local income tax, you may not deduct sales tax.

Q: What entry is used to record remitting the sales tax?

To record the sales tax you remit to the government in your books, you’ll debit your sales tax payable account and credit your cash account.

By Marshall Hargrave

Published on March 17, 2025

Reviewed By Liz Farr

What is sales tax remittance?

Sales tax remittance is the process of paying sales tax you've collected from customers to the appropriate government entity, like a state or local tax authority.

As a small business owner, having a physical presence or selling online to customers in a certain state may require you to charge sales tax. Sales tax laws and rates can vary, and it can get overwhelming to keep up and stay compliant.

Let’s look at the sales tax remittance process, from understanding your obligations to filing your sales tax return. We'll provide actionable tips on how to streamline your sales tax process, saving you time and money while avoiding potential penalties.

How to file and pay your sales tax remittance

How to file sales tax returns by state

Accurate sales tax remittance best practices

Find peace of mind come tax time

Sales tax remittance FAQs

How to file and pay your sales tax remittance

Filing your sales tax can be done quickly and efficiently in five steps:

The steps for how to file and remit sales tax.

1. Understand your sales tax obligations

The first step to filing sales taxes is to understand your tax obligations. Sales tax laws and rates will vary depending on the state you do business in or whether you have a sales tax nexus with a state that collects sales taxes.

A sales tax nexus is a connection you have with a state—which can be physical or economic, such as a physical location or selling to customers in a state.

Review the sales tax laws in the area where you establish a physical presence. In addition, read the economic nexus laws to establish if you have a connection with that state. Many states have an economic threshold of revenue or transactions in that state.

Additionally, when applying economic thresholds, keep in mind that the definition of “sales” in each state’s law can vary between gross, retail, or taxable sales.

2. Obtain a sales tax license

Once you understand your sales tax obligations, you should obtain a sales tax permit if you haven’t already. A sales tax license is a document that lets you collect sales taxes on taxable goods or services.

A list of what you need to apply for a sales tax license.

You should apply for a sales tax license if your business has a connection with a state with sales tax and if you sell taxable goods or services.

You can apply for a sales tax license by contacting the state agency responsible for issuing these permits. However, each state may have a different application process.

The application process usually involves providing information about your business, such as name, business structure, address, and contact information.

3. Collect sales taxes

Next, you need to start collecting sales tax on taxable goods and services. Some states don’t charge sales tax, but if you sell goods in one of the 45 states that do, you’re responsible for collecting it.

The amount of sales taxes you have to collect will vary depending on the state and area of your business. Sales tax rates can fluctuate monthly and can vary from 0% to 12.75% depending on your location.

To determine how much sales tax to collect, keep up with tax regulations, use a sales tax calculator or turn to a point-of-sale system that automatically calculates sales taxes on each purchase.

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4. Determine filing frequency

When you register your business to collect and report sales and use tax, the tax authority provides a notice to the business of the filing frequency per tax type, which may change depending on location.

Filing frequency defines when you must report and pay the tax authority—usually based on revenue and often set to monthly, with tax due on or before the 20th of the month following the period reported.

For example, an October monthly return may be due on or before Nov. 20. Some states have worked to unify their filing rules under the Streamlined Sales Tax (SST), which requires monthly filing. Note that those filing rules only apply to certain sellers using automated calculation and filing software.

Some states, however, differentiate tax administration by tax types:

Sales tax: Applies to intrastate sales, which are sales occurring within a state
Sellers use or vendors use tax: Applies to intrastate sales, which are sales occurring between states
Consumers use tax: Applies to purchases for which tax was not properly paid

Jurisdictions that make tax type distinctions typically require separate registration and reporting per tax type. Reporting for the correct tax types helps small businesses minimize out-of-pocket tax expenses.

5. Remit sales taxes

When it’s time to remit sales taxes, you can file it by mail or electronically, depending on the state. Check with your state’s revenue department to understand the sales tax remittance process and whether you can schedule payments before the deadline.

If filing by mail, understand if your state treats the return and payment timely if postmarked on or before the due date or if they measure timeliness based on the receipt date.

Remember that states can make mistakes or have technical “glitches.” Save your online confirmations, as well as proofs of mailing and canceled checks related to paper submissions, so that if there is a mistake, you can use that proof to eliminate the penalty or interest assessed for late submissions.

How to file sales tax returns by state

Remitting sales taxes varies by state, with some states requiring electronic tax returns and payments, while others only accept you to mail documents.

Use this chart to understand how to file sales tax returns in your state:

Accurate sales tax remittance best practices

Filing and remitting sales tax is crucial to maintaining compliance and avoiding penalties. Here are some tips for filing sales tax:

Stay informed about tax changes: Keep up with changes in sales tax rates and regulations around your area, and understand your tax nexus obligations ahead of time.
Keep detailed records: Maintain records of all sales transactions since it’s crucial for accurate returns. This includes invoices, receipts, and exemption certificates.
Monitor filing frequency: Know your required filing frequency and keep track of submission deadlines.
Use accounting software: Use accounting software and automation tools that calculate sales tax for each purchase and help file your sales tax returns.
Stay informed about tax changes: Keep up with changes in sales tax rates and regulations around your area, and understand your tax nexus obligations ahead of time.
Keep detailed records: Maintain records of all sales transactions since it’s crucial for accurate returns. This includes invoices, receipts, and exemption certificates.
Monitor filing frequency: Know your required filing frequency and keep track of submission deadlines.
Use accounting software: Use accounting software and automation tools that calculate sales tax for each purchase and help file your sales tax returns.

Many states offer a collection allowance or timely-file discount, regardless of whether filing returns electronically or by paper. When claiming discounts, ensure you’re recording them under the correct tax type because not all jurisdictions allow a discount for every tax type.

Find peace of mind come tax time

As your business grows, understanding the sales tax remittance process can help you stay compliant with laws and regulations, whether you have a physical store or an e-commerce business.

Sales tax software with automatic tax calculations like QuickBooks Online helps you keep up with changing sales and use tax rates and conveniently accounts for sales tax nuances in every state, including those on clothing, food, medical items, services, and software.

Sales tax remittance FAQ

What does it mean when sales tax is remitted?

Is sales tax remitted deductible?

What entry is used to record remitting the sales tax?

Disclaimers:

*QuickBooks Live Expert Assisted requires QuickBooks Online subscription. Additional terms, conditions, limitations, and fees apply.

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Marshall Hargrave
Marshall Hargrave is a financial writer with nearly two decades of experience in finance, investing, and tax industries. He’s helped create and edit content for the likes of Investopedia, RobinHood, Fortune, and Yahoo! Finance. He’s also supported startups and small businesses with accounting, bookkeeping, and budgeting and worked with various finance organizations like the Consumer Bankers Association and the National Venture Capital Association. Marshall is a former Securities & Exchange Commission-registered investment adviser with a bachelor's degree in finance from Appalachian State University.