How do I close my business? What if my business moves to a different state?

If you close your business in a state where you have registered for a sales tax license, you would need to reach out to the state directly to properly close your license. To help you save your time and resources, we offer deregistration services in which we contact the relevant state tax offices on your behalf and handle the closure of your license for you!

Here are some possible scenarios for cancellation of sales tax registration:

• Your business no longer has sales tax nexus in a state

• Your business closes or is passed to new ownership 

• The state has a Marketplace Facilitator law which allows marketplace sellers with no business sales in the state to cancel sales tax permit(s)

It is imperative to keep in mind that, once you cancel your sales tax permit(s), you must disable sales tax collection on all existing sales platforms and integrations. 

That said, being thorough and accurate when beginning the cancellation process will save you a lot of time, money, and resources so you don’t have to re-register for a sales tax permit and re-enable sales tax collection later on!

Reasons you might not want to cancel your sales tax registration:

• You cancel your sales tax permit in a state, then hire an employee remotely in that same state. You would then be required by the state to register again for a new sales tax permit because you have nexus in the state again.

• Let’s say, you sell your products on Amazon and through your own Etsy shop. Amazon opens up a new fulfillment center in the state (where you canceled your permit) and your orders are now being fulfilled at this FBA warehouse, after you cancel your sales tax license. Now you qualify for nexus once again!

• You cancel your sales tax license in a state you no longer qualify for physical or economic nexus, however you introduce a new product that skyrockets in sales! This new hit product sends sales through the roof and you requalify for economic nexus in the state and are required to register for a new sales tax license.

With this in mind, please don’t forget that even if you move your business from one state to another, it is possible that you will have continued nexus in that specific state. This is known as trailing nexus.

It is also important to understand that if you do not facilitate closing your sales tax license with your state, they will continue to assume that you are collecting sales tax and therefore, expect for you to continue filing returns and begin charging you late fees.

Prior to closing your business, we recommend reaching out to the state where your business is located first or consulting your CPA or vetted sales tax expert to avoid any state penalties.

Here is a handy list of phone numbers to contact your state Department of Revenue or Taxation. If you need any assistance with the deregistration process, Taxually is always here to help!