Massachusetts follows the common practice of raising state revenue by the imposition of sales and use tax. A business selling products generally must collect sales taxes. Many service providers must also collect tax from their customers. A business must first register with the Massachusetts Department of Revenue to get a sales tax permit. The business then regularly collects the tax monies and uses sales tax forms to remit the tax to the Department of Revenue.
Check with the Massachusetts Secretary of the Commonwealth Corporations Division to see if you need to register your Massachusetts business with that state office. The general rule is that the following business entities must file with the Corporations Division: business trusts, voluntary associations, corporations,limited liability companies, limited liability partnerships and limited partnerships. You can find legal definitions of these business entities and filing forms at sec.state.ma.us/cor/Functionality/walkinmail.htm.
If you register a new business with the Corporations Division, then use your registered Massachusetts business name on all sales tax, use tax and other business tax registration forms.
Fill out an application to obtain an FEIN. This is a federal employer identification number, issued by the IRS. On the IRS.gov website, you can find an explanation about which kinds of Massachusetts businesses need to get an FEIN. The prime example is that any company with employees must get an FEIN. You can find the information by searcing for “EIN instructions” with IRS.gov’s search engine.
Fill out a Massachusetts sales and use tax registration form. After you submit the form, which also includes registration for other Massachusetts business tax, you will get a sales tax permit (certificate). You then use that to collect sales tax from your customers and the number on the certificate when remitting Massachusetts sales tax to the Department of Revenue. Go to the WebFile For Business site at https://wfb.dor.state.ma.us/webfile/business/Public/Webforms/Login/Login.aspx to register for Massachusetts taxes and get a tax ID number.
Determine your sales tax collection and reporting requirements. While you should get a Massachusetts business attorney to be on the safe side, the Department of Revenue does provide a rather detailed “Guide to Sales and Use Tax” (see sources below).
Note that there are many business transactions that are exempt from Massachusetts sales tax. Of course, you do not want to be collecting taxes if your Massachusetts business transactions fall under an exception.
You can also use the the Massachusetts Sales and Use Tax Collection Schedule to see the Massachusetts sales tax rate and the amount due on certain transactions. View that schedule at mass.gov/Ador/docs/dor/sales_use/6.25chart.pdf.
Collect and pay the sales taxes received from your customers. In Massachusetts, there is an online system to report state sales and use taxes. Go to the WebFile for Business web page mentioned above to file Massachusetts sales, use and other business taxes online.
Massachusetts Department of Revenue: A Guide to Sales and Use Tax