Indiana sales tax basics for small retailers

Indiana keeps sales tax simpler than most states — one statewide rate, no local add-ons. That simplicity is exactly why owners get complacent about it.

Indiana charges a single statewide sales tax rate of 7% on retail sales of tangible personal property, with no county or city surcharges layered on top. Compared with Illinois or Ohio it is refreshingly straightforward. The problems we see are almost never about the rate; they are about registration, timing and paperwork.

Getting registered

Before making taxable sales you need a Registered Retail Merchant Certificate, obtained through the Department of Revenue's INBIZ and INTIME systems. The certificate is displayed at the place of business and renewed periodically. Selling without one is a straightforward compliance failure that is easy to avoid.

Filing frequency

The state assigns a frequency based on your liability — monthly for most established retailers, annually for very small filers. The assigned frequency, not your preference, governs. Returns are filed on Form ST-103 through INTIME, and the deadline does not move because a bookkeeper was unwell.

Exemption certificates

Sales to a reseller or an exempt organisation are only exempt if you hold a valid, completed exemption certificate on file at the time of the sale. In our experience this is the single largest audit exposure for small Indiana retailers: the sale was genuinely exempt, but the paperwork was never collected, so the tax is assessed anyway. Collect the certificate before the invoice, store it digitally and review the file annually.

What is and is not taxable

• Most tangible goods sold at retail are taxable.
• Most professional services are not, but a service bundled with goods may make the whole invoice taxable.
• Grocery-type food is generally exempt while prepared food is not — which is why cafes need their POS configured properly.
• Shipping and handling charged on a taxable sale usually follow the taxability of the item.
• Marion County restaurants also handle a separate food and beverage tax alongside the state return.

Selling online

If you ship to customers in other states, economic nexus thresholds may create a filing obligation there even without a physical presence. Marketplace facilitators such as Amazon and Etsy usually collect and remit on your behalf, but those sales still need to be reported correctly in your own books so the return reconciles.

The four corrections we make most

1. POS tax codes never reviewed after a menu or catalogue change.
2. Sales tax collected but posted to income rather than a liability account, inflating revenue.
3. Exemption certificates missing or expired.
4. Returns filed on the correct date but from figures that were never reconciled to the ledger.

Get it checked

We reconcile sales tax liability as part of every monthly close, and we file ST-103 returns for clients at a flat $45 per filing. If you are unsure whether your last four returns tie back to your books, ask us to look. Call +1 (615) 727-3650 or send an enquiry.

Rates and rules change. This article reflects our understanding at the date of publication and is general information rather than advice — see our disclaimer.