By Guest Contributor Jo Ann M. Koontz, Esq., CPA – www.koontzassociates.com

If you run a business in Florida, there’s a chance that you qualify for certain sales tax exemptions. According to the Florida Department of Revenue, products or services that you purchase with the intent to resell are often exempt from sales tax. But what does this mean, exactly?

Let’s say you run a hair salon. You probably buy plenty of hair styling products from your favorite supplier. You use some of these products during your client appointments – when you wash their hair, apply highlights, or style a new haircut. On the other hand, some products stay on the shelf for resale to clients.

The guidelines here are pretty simple: the products you use throughout the day at your salon are generally taxable, because they are used during the normal operation of your business. The products on the shelf, though, are probably exempt from sales tax because you purchase this set of products with the intention of reselling them to your clients.

Compare this to a service-based business, such as an attorney. At Koontz & Associates, we don’t sell products to clients. We sell services. Any products we purchase — such as office equipment, software, or furniture — are used in our office during the normal operation of our business. Because of this, we generally pay sales tax on these items.

If you purchase products that are exempt from sales tax, you need an Annual Resale Certificate. The certificate is issued by the Florida Department of Revenue and is valid until December 31 in the year it was issued.

In 2015, the FL DOR updated the way these certificates are issued. Hard copies of this certificate will no longer be issued, but you can register online and easily access your certificate this way. In addition, the certificate no longer requires a signature. By obtaining the certificate, you confirm that you plan to purchase items for resale.

For more details about the Annual Resale Certificate, and to determine whether you are eligible to register, you can visit the FL Department of Revenue website.

Jo Ann M. Koontz, Esq., CPA
Koontz & Associates, PL
1819 Main Street, Suite 910
Sarasota, FL  34236
Phone 941-225-2615
Fax 941-951-2618
joann@koontzassociates.com
www.koontzassociates.com

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

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