Sales Tax for Alabama Businesses: The Basics

If your business sells taxable goods or services in Alabama, you are generally responsible for collecting sales tax from customers and passing it to the taxing authorities.

Sales tax is not your money.  When you collect it, you are holding it for the state and for any city or county that levies its own.  Whether your product or service is taxable, at what rate and in which jurisdiction all depend on the facts, and Alabama has its own rules, so we check how they apply.

This article is general information.  Our office does not file sales tax returns, but we can talk through how sales tax fits into your books and your overall tax picture.  For the rules themselves, the Alabama Department of Revenue is the authority.

You generally register with the taxing authority before you start selling, and then file returns on a schedule they assign.

The Department of Revenue runs My Alabama Taxes, an online service for accounts, returns and payments.  Which returns you file, how often, and where local taxes are sent depend on your business and your location.  Keep a copy of every return and payment confirmation.

Registration and filing with the state are done by the business owner, or by whoever you have chosen to do it.  If you are still planning, our starting a business tax checklist shows where sales tax fits among the other first steps.

Use tax is a companion to sales tax, owed on taxable items that were bought without sales tax being charged but are used in the state.

For example, if a business buys equipment from a seller that did not charge Alabama tax and uses it here, use tax may be owed directly.  Sellers who ship into Alabama from elsewhere may also have obligations.  The rules on remote sellers have changed over time, and rules change, so confirm the current ones.

Buyers, not just sellers, can owe use tax, so keep purchase records.  This ties into good books.  See what is bookkeeping for how tracking supports every tax filing.

Our payroll and bookkeeping service can keep your sales, sales tax collected and expenses organized, so the numbers are ready when you or the state need them.

Through payroll and bookkeeping, we help keep your records accurate.  We do not file sales tax returns, and we do not give legal advice, but we can talk through how these rules fit the tax side and your overall planning.

We serve Arab and the surrounding area.  Call 256-586-4635 or use our contact page. Bring your paperwork to the office, and please do not send Social Security numbers or documents through the website.