To operate as a vendor in Texas, you need a Sales and Use Tax Permit from the Texas Comptroller of Public Accounts. The permit is free, you apply online through the Comptroller’s eSystems portal, and most applicants receive it in the mail within two to three weeks.1Texas Comptroller of Public Accounts. Texas Online Tax Registration Application That single permit covers the state’s core “vendor license” requirement for anyone selling taxable goods or services, but depending on what you sell and where, you may also need a food establishment permit, an alcoholic beverage license, or a local peddler or mobile-vendor permit from your city or county.
Who Needs to Register
If you sell, lease, or rent tangible goods in Texas, or provide taxable services such as data processing, telecommunications, or property repair, you need the permit before your first transaction.2Texas Comptroller. Engaged in Business It applies whether you run a storefront, a booth at a flea market, a food truck, or an online shop shipping into the state. Temporary and seasonal vendors are not exempt.
Texas uses two tests for who counts as “engaged in business” here. Physical nexus means you have a warehouse, office, employee, or sales representative in the state. Economic nexus applies to remote sellers who exceed $500,000 in Texas gross revenue during a twelve-month period.3State of Texas. Texas Tax Code 151.008 – Engaged in Business Hitting either threshold triggers the registration requirement.
Nonprofits still need a permit if they sell taxable items. Exemptions apply only if the organization sells only at qualified tax-free fundraisers, sells only nontaxable items, or uses a for-profit entity to conduct sales for it.4Texas Comptroller of Public Accounts. Nonprofit and Exempt Organizations – Purchases and Sales
What to Have Ready Before You Apply
The application won’t let you save partial progress and return, so pull everything together first:
- Your Social Security number if you’re a sole owner, or your Federal Employer Identification Number if you’re a corporation, partnership, or LLC.5Texas Comptroller of Public Accounts. Form AP-220, Instructions for Sales Tax Application
- Names, addresses, and identification numbers for every officer, partner, or director in the business.
- Your six-digit NAICS code from the U.S. Census Bureau’s classification system, describing your primary business activity. You can look it up at census.gov/naics.
- The physical address of every business location. Local tax rates vary across Texas jurisdictions, and the Comptroller assigns your combined rate based on where you operate.
- The date you first made or plan to make taxable sales. This sets when your first return is due. If you already started selling before registering, the Comptroller will expect returns going back to that date.
- If you bought an existing business, the prior owner’s name and permit number.
How to Apply
The fastest route is the Comptroller’s eSystems portal at comptroller.texas.gov/taxes/permit. Create a secure profile, enter your business information, and submit electronically. Most online applicants get their permit in the mail within two to three weeks.1Texas Comptroller of Public Accounts. Texas Online Tax Registration Application
If you prefer paper, submit Form AP-201 by mail to the Comptroller’s office in Austin using the address in the form instructions. Paper takes four to six weeks. Either way, there is no application fee, and the permit is mailed to your business address.6Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions The Comptroller may require a security bond in some cases, more commonly for applicants with prior tax delinquencies or certain risk factors. A Comptroller field office can tell you if that applies to you.
What the Permit Requires You to Do
Once your permit arrives, you’re authorized and required to collect sales tax on every taxable transaction. The Texas state rate is 6.25 percent. Local jurisdictions (cities, counties, transit authorities, and special purpose districts) can add up to 2 percent, bringing the maximum combined rate to 8.25 percent.7Texas Comptroller of Public Accounts. Sales and Use Tax Your permit must be displayed in a visible spot at your place of business.
Filing Returns
Every permit holder files returns, even in periods with zero taxable sales.6Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions Skipping a filing because you had no sales is a common early mistake, and it triggers penalties automatically.
Returns are due monthly by default, on the 20th of the month following each calendar month. If you owe less than $500 in state tax for a month, or less than $1,500 for a quarter, you qualify to file quarterly.8State of Texas. Texas Tax Code 151.401 – Tax Due Dates The Comptroller may assign annual filing to very low-volume sellers. Your assigned frequency appears on your permit and can be checked in eSystems.
The Timely Filing Discount
Texas rewards on-time filers. You can keep 0.5 percent of the tax you collect as a discount for timely reporting and payment. If you prepay estimated tax quarterly, you get the 0.5 percent plus an additional 1.25 percent for prepaying.7Texas Comptroller of Public Accounts. Sales and Use Tax The amounts are modest but add up over a year.
Records
Keep all sales tax records for at least four years, including invoices, receipts, and exemption or resale certificates. If you can’t produce a resale or exemption certificate for a sale where you didn’t collect tax, the sale is presumed taxable.9Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions Under audit, hold everything until it’s resolved, even past the four-year mark.
Penalties for Selling Without a Permit or Filing Late
Late-payment penalties escalate quickly:
- 1 to 30 days late: 5 percent of the tax owed.
- More than 30 days late: 10 percent.
- After a Notice of Tax Due: another 10 percent, for a total of 20 percent.10Texas Comptroller of Public Accounts. Penalties for Past Due Taxes
Each late report also carries a flat $50 penalty, and multiple past-due periods compound fast.
Selling without a valid permit is a Class C misdemeanor for a first offense, and each day of operation counts as a separate violation.11State of Texas. Texas Tax Code 151.708 – Selling Without Permit Criminal Penalty Collecting sales tax from customers and pocketing it rather than remitting it carries far steeper consequences. The offense classification scales with the amount kept, from a Class C misdemeanor for under $50 up to a first-degree felony for $200,000 or more.12Cornell Law School Legal Information Institute. 34 Texas Admin Code 3.305 – Criminal Offenses and Penalties
Keeping Your Permit Active
A Texas Sales and Use Tax Permit does not expire, but it’s only valid while you’re actively engaged in business as a seller. If you stop operating, close the location in eSystems and return the permit for cancellation. The Comptroller can also cancel a permit on its own if it determines you’re no longer operating.6Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions A cancelled permit cannot be reactivated; a new business means a new application. Any time your address changes or you add a location, update the Comptroller so the correct local rates apply.
Additional Licenses You May Need
The Sales and Use Tax Permit only authorizes you to collect and remit sales tax. Selling certain products requires separate licenses from other state agencies, and this is where vendors most often get caught short.
Food and Beverage
If you sell food to the public, you likely need a retail food establishment permit from the Texas Department of State Health Services (DSHS), or from your local city or county health department if it runs its own permitting program. Check with local government first to confirm which agency has jurisdiction.13Texas Department of State Health Services. Starting a New Retail Food Establishment Under Department of State Health Services Jurisdiction
Under DSHS jurisdiction, permits cover fixed establishments, mobile food units (including food trucks and roadside vendors), and temporary establishments operating at a single event for no more than 14 consecutive days. Fees for fixed establishments run from $258 to $773 based on gross annual food sales; mobile units are $258 each and require a separately permitted Central Preparation Facility; single-event temporary permits are $52, and a two-year multi-event permit is $200.14Texas DSHS. Permitting Information – Retail Food Establishments You must have your sales tax permit before applying for a DSHS food permit. Most food operations also need at least one Certified Food Manager on staff and food handler certification for all employees within 60 days of hire. Roadside vendors are limited to pre-packaged items.
Alcohol
Selling alcoholic beverages requires a permit or license from the Texas Alcoholic Beverage Commission, entirely separate from the Comptroller’s permit and any food license. TABC offers dozens of permit types depending on what you sell and how, including retail on-premise licenses for bars and restaurants, off-premise licenses for package stores, and mixed beverage permits.15Texas Alcoholic Beverage Commission. TABC License and Permit Types Applying under the wrong permit type delays the process, so match the permit to your business model before filing.
Local Peddler and Vendor Permits
Many Texas cities and counties require their own peddler, solicitor, or mobile vendor permits on top of the state sales tax permit. These involve a separate application, a fee, and sometimes a background check. Requirements vary widely, so contact the city clerk’s office or local permitting department wherever you plan to operate. Most local applications ask for a copy of your Texas Sales and Use Tax Permit as part of the process.
One Warning for Buyers of Existing Businesses
If you’re purchasing a business rather than starting fresh, Texas law makes the buyer liable for any unpaid sales tax owed by the seller, up to the full purchase price. Withhold enough of the purchase price to cover any potential tax debt and don’t release it until the seller provides a certificate from the Comptroller confirming no tax is due. Skip that step and you’re personally on the hook, with no right to challenge whether the seller actually owed the tax. Failure to pay a successor liability assessment on time adds another 10 percent penalty.16Cornell Law School Legal Information Institute. 34 Texas Admin Code 3.7 – Successor Liability