If you own a business, then you may have to pay something
called a “use tax.” These taxes, however, do not exist everywhere, so if you
have never heard of a “use tax,” you may be confused about exactly what it is
and how it works. Fortunately, though, these taxes really aren’t that difficult
to understand.
Use Tax and Sales
Tax: Not One and the Same
To start off with, people are often confused in thinking
that use taxes and sales taxes are the same thing. This is not the case. Sales
taxes are more common and are taxes paid on personal property.
Use taxes, on the other hand, are excise taxes that are
enacted when a property is first used within a given state.
How Use Taxes Affect
Businesses
As a business owner, your personal property may be subject
to a use tax. Some common reasons for use taxation that you may encounter
include:
·
Resales
·
Business items that you take out of inventory
for a taxable purpose
·
Some purchases for which the sales tax was less
than the sales tax in another state
·
If taxes have not been paid on supplies,
fixtures, and/or equipment from an out of state vendor, at the time of the
purchase of an existing business, or when items are purchased over the internet
·
Your business manufactures items for its own use
States without Use
Taxes
As mentioned earlier, not all states require a use taxes.
The few that do not include:
·
Alaska
·
Delaware
·
Montana
·
New Hampshire
·
Oregon
In these states, however, use taxes may be enacted on
certain items and/or in certain localities, so never just assume you are exempt
from all use taxes.
And, if you live in a state where use taxes are in place,
make sure you fully understand how they work and that you have paid all taxes
that you owe for this reason.