How do I collect sales tax legally?

How to Collect Sales Tax Legally in Michigan

Collecting sales tax in Michigan requires proper registration, accurate calculation, and timely remittance. Follow these operational steps to ensure your business complies with state requirements.

Register for a Sales Tax License

• Register with the Michigan Department of Treasury: Before collecting sales tax, obtain a sales tax license by registering your business through the Michigan Treasury Online (MTO) portal.
• Provide business details: Have your federal Employer Identification Number (EIN), business structure, and contact information ready during registration.

Calculate Sales Tax Correctly

• Apply Michigan’s 6% sales tax rate: As of 2026, the general state sales tax rate is 6%. Some local jurisdictions may impose additional taxes, so verify the applicable rates for your business location.
• Identify taxable products and services: Most tangible personal property is taxable, but some goods and services may be exempt. Keep updated on Michigan’s taxable items list.
• Use automated tools: Implement sales tax automation software or point-of-sale systems that calculate and apply the correct tax rates based on product and location.

Collect and Remit Sales Tax

• Collect tax at the point of sale: Ensure your sales system adds the proper sales tax amount to each taxable transaction.
• Maintain accurate records: Keep detailed sales and tax collection records for bookkeeping and compliance purposes.
• File sales tax returns on time: Michigan requires periodic sales tax filings (monthly, quarterly, or annually) depending on your sales volume. Submit returns and remit collected taxes through the MTO portal by the due dates.

Additional Operational Considerations

• Employee training: Train staff on sales tax policies to avoid errors during transactions.
• Audit readiness: Maintain organized records to simplify potential state audits.
• Stay updated: Monitor Michigan Department of Treasury communications for changes in tax rates, rules, or filing requirements.