What is a Missouri Sales Tax Bond?
Businesses licensed to sell tangible property in Missouri are required to hold a sales tax license. Part of the state requirements for this type of business license includes securing a surety bond, known as a Missouri sales tax bond. A Missouri sales tax bond ensures that the state is protected against non-payment of sales tax by licensed businesses.
Similar to other surety bonds, a Missouri sales tax bond is a contract between three parties. The licensed business is known as the principal and is responsible for posting a bond. The obligee is the state of Missouri requiring a bond to be secured. A surety company provides the bond to the principal, and pays claims if sales taxes are not paid in a timely fashion. However, the business is required to repay these claims to the surety.
What Does a Missouri Sales Tax Bond Cost?
The cost of a Missouri sales tax bond depends on several factors, including the amount of the bond you need and your financial standing. To determine the bond amount, the state calculates three times the monthly sales tax for established companies or estimates this amount for new businesses. Fortunately, the full amount of your bond is not the price you pay.
The surety company that provides your Missouri sales tax bond charges a percentage of the bond, typically ranging from 1 to 5%. Your rate is based on your personal credit score, business financials, and past claims history. Businesses that have a low credit score due to court judgments, tax liens, or other negative marks may pay 10% or more for a Missouri sales tax bond.
How Do I Get a Missouri Sales Tax Bond?
Obtaining a Missouri sales tax bond starts by submitting a brief online application. Once the surety company reviews your business details and financial circumstances, you are provided a quote for your sales tax bond and instructions on how to complete the process.