Starting or running a business in Florida comes with various responsibilities, and understanding sales tax is crucial. This guide, based on information from the Florida Department of Revenue, breaks down everything you need to know about Florida sales tax to ensure your business complies with state regulations.
Who is Required to Collect Florida Sales Tax?
Before you commence business operations in Florida, it’s essential to determine if your business activities or products are subject to sales and use tax. If they are, registering to collect sales tax or pay use tax is mandatory. Here’s a breakdown of business activities that necessitate registration with the Florida Department of Revenue:
- Retail Sales of Taxable Items: If you sell tangible personal property at retail, you must collect sales tax.
- Tangible Personal Property Repairs or Alterations: Services involving repairs or alterations of physical items are taxable.
- Real Property Rentals, Leases, or Licenses: Renting or leasing real estate, such as commercial spaces or storage units, is subject to sales tax.
- Short-Term Living Accommodation Rentals: Businesses renting out accommodations for less than six months, including hotels, motels, vacation rentals, and similar, must collect sales tax.
- Personal Property Rentals or Leases: Renting or leasing personal property like vehicles, machinery, and equipment is taxable.
- Admissions to Amusements, Sports, or Recreation: Charges for entry to entertainment venues and recreational activities are subject to sales tax.
- Manufacturing Goods for Retail Sale: If you manufacture products for retail sales, you are responsible for sales tax.
- Sales of Service Warranty Contracts: Selling warranties for services is a taxable activity.
- Operation of Vending or Amusement Machines: Revenue from vending and amusement machines is subject to sales tax.
- Provision of Taxable Services: Certain services, such as investigative services, nonresidential cleaning, and pest control, are taxable.
- Out-of-State Businesses with Significant Sales in Florida: Remote sellers with over $100,000 in gross sales from remote sales into Florida in the previous calendar year must register.
- Marketplace Providers: Entities facilitating sales for marketplace sellers into Florida may also have sales tax obligations.
Calculating Florida Sales Tax: A Step-by-Step Approach
Florida sales tax is calculated on each taxable transaction, and it’s crucial to understand the rounding rules.
Rounding Algorithm: Effective July 1, 2021, Florida requires businesses to use a specific rounding algorithm for sales tax calculations. The tax computation must extend to the third decimal place. If the third decimal place is 5 or greater, the tax is rounded up to the next cent. For example, if the tax is calculated as $0.065, it rounds up to $0.07. If it’s $0.064, it rounds down to $0.06.
This rounding can be applied to the total tax on an invoice or to each taxable item individually. Businesses were given until September 30, 2021, to update their point-of-sale systems to comply with this algorithm.
For detailed information on rounding, refer to Tax Information Publication (TIP) #21A01-02, “Rounding to Replace ‘Bracket System’ in Calculation of Sales and Use Taxes.”
Stating Sales Tax on Invoices: Florida law mandates that businesses making taxable sales must clearly state Florida sales tax separately on every customer invoice, sales slip, receipt, or billing. The sales tax and any discretionary sales surtax (county tax) can be shown as a single total or itemized separately.
Effective Tax Rates and Rate Divisors: Certain industries may use effective tax rates and rate divisors when separately stating sales tax is impractical. Brochures with industry-specific rates and instructions are available from the Florida Department of Revenue.
Florida Sales Tax on Remote Sales
Since July 1, 2021, Florida law mandates remote sellers to collect and remit sales and use tax, including any applicable discretionary sales surtax, on sales made into Florida if their remote sales exceeded $100,000 in the previous calendar year.
Examples of Remote Sales:
- Internet purchases
- Mail-order catalog purchases
- Purchases from outside the United States
- Furniture bought from out-of-state dealers
- Computer equipment ordered from out-of-state vendors
Many large online retailers and out-of-state businesses already collected Florida sales tax before these laws were enacted.
Marketplace Providers and Remote Sales: Marketplace providers are also required to register and remit sales tax on sales they facilitate for marketplace sellers delivered into Florida. Each business location within Florida requires a separate electronic registration, while out-of-state businesses can use one application for all locations. For application details, see the Florida Business Tax Application for Marketplace Providers and Remote Sales (DR-1MP).
For more information on remote sales, consult Tax Information Publication (TIP) #21A01-03, “New Registration Requirement for Persons Making Remote Sales and for Marketplace Providers and Sellers.”
Filing Your Florida Sales Tax Return: Essential Tips
Accurate and timely filing is crucial to avoid penalties. Here are some key tips for filing your Florida Sales and Use Tax Return:
- File On Time: Submit your return for each reporting period, even if no tax is due. Avoid skipping periods or combining them.
- Sign Up for Due Date Reminders: Utilize the Florida Department of Revenue’s email reminder service to stay on track with deadlines.
- Use the Correct Lines on Form DR-15: Ensure you enter transactions on the correct lines of the Sales and Use Tax Return (Form DR-15) as different tax rates may apply.
- Calculate Sales Tax Accurately: Compute the correct sales tax, including discretionary sales surtax (county tax), if applicable.
- Complete All Return Information: Fill out all sections of the return, front and back, and include required signatures.
- Complete Back of Return for Discretionary Sales Surtax: If you collected county tax, ensure you complete the back of the return. Refer to the tutorial on How to Calculate, Collect, and Report Your Discretionary Sales Surtax for assistance.
- Do Not Include Tax Collected in Gross Sales: Including collected tax in gross sales will inflate your tax liability.
- Calculate Collection Allowance Correctly: When filing and paying electronically on time, you may be eligible for a collection allowance of 2.5% on the first $1,200 of tax due, capped at $30 per location.
Florida Sales Tax Registration and Account Changes
Registering each business location is mandatory for collecting, reporting, and paying sales tax.
Registration Methods:
- Online Registration: Use the convenient online registration system.
- Paper Application: Submit a paper Florida Business Tax Application (Form DR-1).
Remember, remote sellers and marketplace providers also have specific electronic registration requirements as of July 1, 2021.
Adding Locations or Updating Existing Registrations: For businesses already registered, use the Application for Registered Businesses to Add a New Florida Location (Form DR-1A) to:
- Register a new business location or Florida rental property.
- Update a registered location that has moved to a different Florida county.
For detailed application guidance, see Registering Your Business (Form DR-1N).
Upon registration, you’ll receive a Certificate of Registration (Form DR-11), a Florida Annual Resale Certificate for Sales Tax (Form DR-13), and tax return forms. Display your Certificate of Registration visibly at your business location.
When You Need to Notify the Florida Department of Revenue
Keep the Department informed of any changes to your business:
- Business Name Change
- Mailing Address Change
- Location Address Change (within the same county)
- Business Closure or Sale
- Business Becoming Active (selling or renting taxable property or services)
Update your account information quickly online.
When to Submit a New Florida Tax Application
A new registration is required in certain ownership or entity changes:
- Change of Legal Entity
- Change in Business Ownership
Use the online registration system or complete a paper Florida Business Tax Application (Form DR-1) for new registrations.
Filing and Paying Florida Sales Tax: Methods and Deadlines
Sales and use tax is generally reported on the Sales and Use Tax Return (Form DR-15). Forms and instructions are available on the Department’s website under Sales and Use Tax.
Filing and Payment Options:
- Electronic Filing and Payment (eFile and ePay): Use the Department’s free File and Pay webpage or purchase vendor software.
- Electronic Filing Requirement: Businesses that paid $5,000 or more in sales tax in the previous state fiscal year are required to file and pay electronically. Failure to do so may result in penalties.
General Due Dates:
Sales tax returns and payments are due on the 1st of the month and considered late after the 20th of the month following the reporting period. Deadlines vary based on filing frequency (monthly, quarterly, semiannual, or annual).
For electronic payments and filings, ensure you initiate payment and receive confirmation by 5 p.m. ET the business day before the 20th to avoid penalties. Consult the Florida eServices Calendar of Electronic Payment Deadlines (Form DR-659) for specific dates.
If the 20th falls on a weekend or holiday, electronic returns are timely if confirmation is received on or before the next business day. Paper returns are timely if postmarked or hand-delivered by the next business day.
Collection Allowance: A collection allowance of 2.5% (up to $30) is available for timely electronic filing and payment.
Late Filing Penalties and Interest: Late filings may incur a penalty of 10% of the tax owed (minimum $50), plus interest on underpayments and late payments. Interest rates are available on the Department’s Tax and Interest Rates webpage.
Florida Sales Tax Filing Frequency
New businesses are typically set up for quarterly filing. Your filing frequency depends on your annual sales tax collections:
Filing Frequency Limits:
| Annual Sales Tax Collections | Return and Payment Filing Requirement |
|---|---|
| More than $1,000 | Monthly |
| $501 – $1,000 | Quarterly |
| $101 – $500 | Semiannual |
| $100 or less | Annual |
Contact Taxpayer Assistance at 850-488-6800 to change your filing frequency if you qualify.
Florida Address/Jurisdiction Database
The Florida Department of Revenue’s Address/Jurisdiction Database helps identify the correct county for Florida addresses and determine applicable sales tax and discretionary sales surtax rates.
Florida Annual Resale Certificate for Sales Tax
Registered businesses receive a Florida Annual Resale Certificate for Sales Tax, allowing tax-free purchases or rentals of property or services intended for resale or re-rental. Certificates expire on December 31st annually. Electronically filing dealers must print their certificates, while paper filers receive them by mail in mid-November.
Businesses making tax-exempt sales for resale must document each sale by obtaining a copy of the customer’s certificate or a Department-issued authorization number. More information is available on the Annual Resale Certificate for Sales Tax webpage.
Florida Certificate of Forwarding Agent Address
Forwarding agents involved in international export can obtain a Florida Certificate of Forwarding Agent Address by submitting Form DR-1FA. Approved agents receive Form DR-14FAA and are listed on the Department’s List of Approved Forwarding Agents.
Selling dealers can accept a valid certificate copy or rely on the Department’s list instead of collecting sales tax on goods shipped to a forwarding agent’s address for export. Proper documentation of shipment to the forwarding agent is required.
Florida Farm Tax Exempt Agricultural Materials (TEAM) Card Program
Beginning January 1, 2024, the Florida Farm Tax Exempt Agricultural Materials (TEAM) Card Program allows qualified farmers to claim sales tax exemptions on agricultural purchases using a TEAM Card instead of paper exemption certificates.
Eligibility: Farmers classified as agricultural or using agricultural best management practices are eligible.
Application and Renewal: Apply for a TEAM Card using Form DR-1 TEAM online or by mail. The Department of Agriculture and Consumer Services (DACS) issues approved cards.
Documenting Exempt Sales to TEAM Card Holders: Sellers accepting TEAM Cards must keep a copy of the card or obtain a transaction authorization number from the Department’s online Certificate Verification System or automated phone system at (877) 357-3725. For regular customers, a vendor authorization number can be requested.
For further details, review Florida TEAM Card – Frequently Asked Questions and Tax Information Publication No. 23A01-25, “New Florida Farm Tax Exempt Agricultural Materials (TEAM) Card Program Beginning January 1, 2024.”
This guide provides a comprehensive overview of Florida sales tax for businesses. For the most accurate and up-to-date information, always refer to the official resources provided by the Florida Department of Revenue.
