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.
Selling into a new state? Sales tax permit registration.
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.
Want us to handle it?
We keep sales tax collected and owed reconciled in your books every month, so returns are quick to file.
Price: Free review of your books first, then a written quote before any work starts.
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.
Worked example with numbers
Suppose you sell $10,000 of taxable goods in a quarter and the New Jersey state rate printed on the Division of Taxation site is 6.625%. Tax collected is $10,000 x 6.625% = $662.50. Record sales of $10,000 and sales tax payable of $662.50. You owe $662.50 to the state, so it never counts as your income.
Include an exempt sale: a $2,000 sale to a reseller with a valid certificate has no tax, and you keep the certificate on file. Total sales are $12,000, taxable sales $10,000, exempt sales $2,000. Your return should show those same figures.
Mistakes that cost money
Forgetting to keep exemption certificates. Filing on the wrong schedule. Spending collected tax because the money sits in the operating account. Assuming a service is nontaxable without checking the Division's guidance. Confirm the current rate, filing frequency and due dates on the NJ Division of Taxation website.
Check your work
Before filing, compare total sales on your books to the sales on the return, and the tax payable account to the tax due.
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.