Requirement of Certificate of Authorization for Sole Proprietor in New York

by Joe Stone

Starting a new business as a sole proprietor means you are personally liable for the conduct of the business. If your company sells goods or services subject to New York sales tax, you are required to register with the New York Department of Taxation and Finance, and you must obtain a Certificate of Authority to collect sales tax. The certificate should be obtained at least 20 days before your business commences.

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Taxable Sales

New York sales tax applies to both goods and services, although certain items are exempt from this tax. The Department of Taxation and Finance, or DTF, provides guidance concerning the items subject to sales tax, but generally, all goods are taxable unless a specific exemption applies, and services are usually not taxed unless a specific tax applies. To determine if your business sells goods or services subject to sales tax, review Tax Bulletin ST-740, which provides a quick reference of items subject to tax and what is specifically exempt. If the goods or services you sell are listed in the bulletin, you must obtain a Certificate of Authority from the DTF.

Application Procedure

You apply for a Certificate of Authority by filing Form DTF-17. This application can be submitted through the Online Permit Assistance and Licensing (OPAL) website. The DTF prefers that applications be submitted online rather than mailed. Form DTF-17 is identified on the OPAL website as "Certificate of Authority to Collect Sales Tax." As a sole proprietor, you will file the application in the legal name of your business. You must include the Employment Identification Number issued by the Internal Revenue Service, or if you are not required to obtain an EIN, use your own Social Security number instead. Specify the street address of your business, your phone number and an email address where tax information can be sent to you. The OPAL website provides detailed instructions for completing Form DTF-17, and you'll need to include other information such as a description of your business, types of goods or services you intend to sell, and the bank account where you will be depositing the sales tax you collect.

Displaying Certificate of Authority

The DTF will mail a Certificate of Authority to you after processing your application. The certificate must be displayed in plain view at your place of business. If you specified more than one business location on your application, you will receive a certificate for each location, which must be displayed at the location corresponding to the address on the certificate. If your business is not operated out of a physical address, the certificate must be displayed on your business-owned truck, cart or other type of stand.

Miscellaneous Certificate Requirements

A Certificate of Authority cannot be transferred from one business owner to another. If you purchase an existing business, you must obtain your own certificate. When you sell your business, your must return the certificate to the DTF within 20 days of your last sale, accompanied by your final sales tax return. The same applies if you close your business.