Most businesses starting in North Carolina that are selling a product or offering certain services will need to register for a Sales and Use Tax Number. This is commonly referred to as a sales tax number, seller’s permit, sales tax license, sales tax number or sales tax registration.
The Sales and Use Tax Number is obtained through the North Carolina Department of Revenue as a part of the North Carolina Business Registration Application. This registration combines registration for sales and use tax and income tax withholding.
Check out the rest of this guide to find out who needs a Sales and Use Tax Number, what products and services are taxable, how to register for a permit and reporting requirements.
Who needs a Sales and Use Tax Number in North Carolina?
A business must register for a Sales and Use Tax Number in North Carolina when:
- Selling tangible personal property at retail
- Selling and providing taxable services
- Renting or leasing taxable tangible personal property
- Selling certain digital property at retail
- Operating a dry cleaner, laundry, or other similar business
- Operating a hotel, motel, or similar business
- Selling tangible personal property, certain digital property, or providing a taxable service at a specialty market or other event
- Selling taxable service contracts
- Charging admission to an entertainment activity
- An out-of-state business selling to North Carolina residents and one of
- Total annual sales of tangible personal property to North Carolina residents is $100,000 or more; or
- Having 200 or more transactions with North Carolina residents annually.
What products and services are taxable in North Carolina?
There are a few exceptions, but almost all physical products are taxable when sold at retail in North Carolina. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Some groceries, prescriptions, medical supplies and equipment used in R&D are tax exempt. See the full list of items exempt from sales tax in North Carolina.
Digital products are considered tangible personal property and are taxable.
Most services aren’t taxable in North Carolina, however there are a few exceptions, some of which include:
- Dry cleaning and laundry services
- Admission charges to an entertainment activity
- Service contracts
- Repair, maintenance and installation services
How to register for a Sales and Use Tax Number in North Carolina
Information needed to register includes:
- Federal Employer Identification Number (FEIN), or SSN if a sole proprietorship with no employees
- Type of business entity (Sole Proprietorship, Partnership, Corporation, LLC)
- Business name
- Doing Business As or Trade Name if there is one
- Physical and mailing address of the business, phone and email.
- Name, title, SSN and address of owners/officers/members
- Date the business will begin taxable activities
- Description of what products or services are being sold
- Accounting method (cash or accrual)
- Estimated amount of sales tax collected each month
How much does a Sales and Use Tax Number cost in North Carolina?
There is no cost for a Sales and Use Tax Number in North Carolina.
How long does it take to get an North Carolina Sales and Use Tax Number?
Most applications submitted online are processed immediately, while mailed in forms take up to four weeks.
After registering the Department of Revenue will send a Certificate of Registration and the sales and use account ID.
Do you have to renew your North Carolina Sales and Use Tax Number?
The Sales and Use Tax Number is a one-time registration and no renewals are needed. Be mindful that if any information about the business changes such as the mailing address, additional locations or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the North Carolina Department of Revenue.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made in the store. When shipping in-state, the sales tax is based on the address of the purchaser.
In addition to the statewide tax, there are additional local sales taxes that may be added by cities and counties. To find sales tax rates, see the sales tax rate tables from the North Carolina Department of Revenue.
When are North Carolina sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected volume of sales, which will be monthly or quarterly. Generally, a business collecting between $100 and $20,000 is sales taxes each month will file monthly.
Wholesale businesses aren’t required to report and seasonal businesses will file during the times of year they generate sales.
Filings are due the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer who will then charge sales tax to the end user of the item.
Wholesalers and distributors will require a sales tax number and fill out a North Carolina Certificate of Exemption to document the items being purchased are for resale.
If you have questions about the Sales and Use Tax Number, the North Carolina Department of Revenue has a handy Sales and Use Tax FAQ page. The NCDOR can also be contacted by calling 877-252-3052.