Do you need to register?
Businesses selling taxable goods or services in New Jersey generally need to register with the state and get a Certificate of Authority to collect sales tax before they begin. Many services are not taxable in New Jersey while many goods are, so check your specific products with the Division of Taxation or a tax professional.
What is the rate?
The New Jersey state sales tax rate is 6.625%. There are limited special cases, such as urban enterprise zones with a reduced rate. Check the Division of Taxation for current rates and exemptions.
How to collect it
Turn on sales tax in your point-of-sale or invoicing system and make sure taxable items are marked. Keep exemption certificates for customers who do not pay sales tax, such as resale certificates. Without one, you are expected to collect.
How and when to file
Returns are filed online with the Division of Taxation, usually quarterly, though larger filers may be on a monthly schedule. Quarterly returns have been due on the 20th of the month after quarter end. Confirm your filing frequency and dates with the state.
How it belongs in your books
Sales tax collected is not income. It sits in a liability account until you remit it. Record your sales net of tax and the tax separately, and reconcile the liability to what you filed. This is one of the most common books errors for card-based businesses.
Common questions
Do I charge sales tax on services?
It depends on the service. Check the Division of Taxation's list for your type of service, or ask a tax professional.
What happens if I forget to file?
Penalties and interest can apply, and you owe the tax even if you did not collect it. File as soon as you can and ask a tax professional about your options.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.