--- title: Sales Tax description: What is sales tax and how does it apply to my business? --- [Skip to content](https://blog.bidclips.com/glossary/sales-tax#main-content) [![bc-logo_color](https://blog.bidclips.com/hubfs/Logo%20Assets/SVG/bc-logo_color.svg)](https://bidclips.com) - Product Show submenu for Product - [Lead Management](https://www.bidclips.com/features/lead-management) - [Customer Comm](https://www.bidclips.com/features/customer-communication) - [Client Manager / CRM](https://www.bidclips.com/features/crm) - [Estimates](https://www.bidclips.com/features/estimates) - [Team Collaboration](https://www.bidclips.com/features/team-collaboration) - [Job Management](https://www.bidclips.com/features/job-management) - [Online Payments](https://www.bidclips.com/features/payments) - [Call Answering](https://www.bidclips.com/features/call-answering) - [Reporting](https://www.bidclips.com/features/reporting) - Industries Show submenu for Industries - [Residential Glass](https://www.bidclips.com/industries/glass-software) - [Auto Glass](https://www.bidclips.com/industries/auto-glass-software) - [Pest Control](https://www.bidclips.com/industries/pest-control-software) - [Painting](https://www.bidclips.com/industries/painting-business-software) - [Pressure Washing](https://www.bidclips.com/industries/pressure-washing-software) - [Handyman](https://www.bidclips.com/industries/handyman-software) - [Landscaping](https://www.bidclips.com/industries/landscaping-software) - [Window Cleaning](https://www.bidclips.com/industries/window-cleaning-software) - [Pricing](https://www.bidclips.com/pricing) - Resources Show submenu for Resources - [Customer Stories](https://www.bidclips.com/resources/customer-stories) - [Webinars](https://www.bidclips.com/resources/webinars) - [Free Tools](https://www.bidclips.com/resources/free-tools) - [Blog](https://blog.bidclips.com) - [Customer Support](https://support.bidclips.com) - [Today In Trades Podcast](https://open.spotify.com/show/2VAc7ZOouYCnbfqt7kJiYA) - [Integrations](https://www.bidclips.com/integrations) - [Sign In](https://providers.bidclips.com) Open main navigation Close main navigation - Product Show submenu for Product - [Lead Management](https://www.bidclips.com/features/lead-management) - [Customer Comm](https://www.bidclips.com/features/customer-communication) - [Client Manager / CRM](https://www.bidclips.com/features/crm) - [Estimates](https://www.bidclips.com/features/estimates) - [Team Collaboration](https://www.bidclips.com/features/team-collaboration) - [Job Management](https://www.bidclips.com/features/job-management) - [Online Payments](https://www.bidclips.com/features/payments) - [Call Answering](https://www.bidclips.com/features/call-answering) - [Reporting](https://www.bidclips.com/features/reporting) - Industries Show submenu for Industries - [Residential Glass](https://www.bidclips.com/industries/glass-software) - [Auto Glass](https://www.bidclips.com/industries/auto-glass-software) - [Pest Control](https://www.bidclips.com/industries/pest-control-software) - [Painting](https://www.bidclips.com/industries/painting-business-software) - [Pressure Washing](https://www.bidclips.com/industries/pressure-washing-software) - [Handyman](https://www.bidclips.com/industries/handyman-software) - [Landscaping](https://www.bidclips.com/industries/landscaping-software) - [Window Cleaning](https://www.bidclips.com/industries/window-cleaning-software) - [Pricing](https://www.bidclips.com/pricing) - Resources Show submenu for Resources - [Customer Stories](https://www.bidclips.com/resources/customer-stories) - [Webinars](https://www.bidclips.com/resources/webinars) - [Free Tools](https://www.bidclips.com/resources/free-tools) - [Blog](https://blog.bidclips.com) - [Customer Support](https://support.bidclips.com) - [Today In Trades Podcast](https://open.spotify.com/show/2VAc7ZOouYCnbfqt7kJiYA) - [Integrations](https://www.bidclips.com/integrations) - [Sign In](https://providers.bidclips.com) - [Get Demo](https://www.bidclips.com/request-a-demo) [Get Demo](https://www.bidclips.com/request-a-demo) [All posts](https://blog.bidclips.com/glossary/all) June 26, 2023 # Sales Tax ![Picture of Joseph Larson](https://blog.bidclips.com/hs-fs/hubfs/Team%20Headshots/profile.jpeg?width=50&height=50&name=profile.jpeg) By  [Joseph Larson](https://blog.bidclips.com/glossary/author/joseph-larson)  ·  1 minute read Sales tax is a type of tax that is imposed on goods and services purchased from entities that are registered to collect sales tax in a particular state. Sales tax is usually calculated as a percentage of the total cost of the purchase, and it is collected by the retailer or vendor who made the sale. In order for a business to collect sales tax, it must first [register with the applicable state](https://www.avalara.com/blog/en/north-america/2019/03/sales-tax-permits-a-state-by-state-guide.html) and local taxing authorities. Once registered, the business will be issued a sales tax permit, which identifies them as an approved collector of taxes. The rate of the sales tax is usually set at the state level and may vary from county to county or city to city. Businesses must also keep detailed records of all purchases made within their jurisdiction that are subject to sales tax. This includes invoices for customers who make purchases in store and receipts for those who make online purchases. Businesses should also maintain accurate records related to how much sales tax they have collected during any given period and submit these reports to the appropriate authorities on a regular basis. Failure to properly pay and collect sales tax can result in serious penalties, including fines and other civil or criminal penalties. For this reason, it is important for businesses to stay up-to-date on their obligations and make sure they are compliant with all applicable laws. With the right guidance and resources, businesses can ensure they are collecting the correct amount of sales tax from customers each time a purchase is made. By understanding their local regulations, business owners can help prevent any costly mistakes related to sales tax collection or compliance. 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