Are you a small business owner that wants to better understand how to calculate sales tax? Maybe you are a consumer who wants to know how to calculate sales tax and know how much the product will end up actually costing you. Today, we will give a simple explanation of how sales tax is calculated and reflected in the financial records.
To determine how much sales tax to charge, multiply your customer’s total bill by the sales tax rate.
Example of how to find sales tax
Let’s say your business is located in Cleveland, Ohio. You don’t have a secondary business location. You must collect sales tax at Cuyahoga County’s rate of 8.00% (state sales tax of 5.75% + Cuyahoga County rate of 2.25%; Cleveland does not have a city sales tax). Your customer’s bill before adding sales tax is $399.
Sales Tax = $399 X 0.08
Sales Tax = $31.92
Collect an additional $31.92 from the customer for sales tax. Then, remit the sales tax to the appropriate government. Contact the state for more information.
Need help tracking your business’s income? Patriot’s small business accounting software makes it easy to organize your money records. Plus, we offer free support if you have any questions. Get your free trial today!