If you're new to the party rental industry, you may have some questions about how to properly handle sales tax on your rentals and purchases. Don’t worry, we've got you covered.

Disclaimer:
The information we are sharing is a general guideline and may not apply to your state. Please use this information as a starting point for your journey of education. At the end of this post, we will provide a list of the tax authorities in your state where you can find the final information needed. It is your responsibility to understand the rules and guidelines of your state. Big and Bright Inflatables is not responsible for any actions taken based on this information. Additionally, sales tax rules are always changing, so be sure to stay up-to-date with your state’s regulations.

When you start your inflatable rental business, one important step is registering with your state's sales tax authority. This allows you to collect sales tax on your rentals. But there’s an added benefit for you, too!

 

How can collecting sales tax save you money when buying new inflatables?

 

Here’s how it works: Once you’re registered with your state’s sales tax authority, you can provide your resale certificate to manufacturers when buying inflatables. This lets you avoid paying sales tax at the point of purchase because you’ll be renting out the items and collecting tax from your customers when they rent from you.

Now, when it comes to your rentals, it’s equally important that you’re collecting sales tax from your customers at the time of the rental. The tax you collect must be reported to your state’s tax authority, typically on a monthly or quarterly basis. Some states require you to file and pay your collected taxes each month, while others may have quarterly filing requirements. Either way, it’s your responsibility to stay on top of it.

Does my state require me to collect sales tax?

There are a few states where sales tax is not required to be collected on inflatable rentals. My research turned up 4 states. I will not list these states here, as rules could change, and I want you to get the latest information directly from your state's authority.

It’s important to note that the responsibility is on you, the customer, to present this certificate correctly when making your purchase. Always double-check your certificate with your manufacturer to ensure that you have the correct form, it’s not expired, and you’re not being charged sales tax. Some states have certificates that never expire, while others require annual renewals.

What happens if I don't collect sales taxes for inflatable rentals?

Now, here's something very important to remember: failure to comply with your state’s sales tax laws can lead to serious consequences. If you don't collect and remit the correct sales tax, your state may audit your business. During an audit, you could be held responsible for the taxes you didn’t collect, plus additional fines and penalties. That’s why it’s crucial to stay informed about the rules in your state and follow them carefully.

Why you should collect sales tax from your inflatable rentals

So, to recap: Register with your state to collect sales tax on your rentals, get your resale certificate, and save on sales tax when buying new inflatables for your business. But always make sure to research your state’s specific rules and regulations. And remember, it’s your responsibility to stay compliant—whether it's collecting sales tax from customers or ensuring your resale certificate is up-to-date.

 

CLICK HERE FOR SALES TAX INFO BY STATE