What Every Dealer Needs to Know About Sales Tax, Titles, and Registrations

Running a car dealership is more than selling vehicles — it’s about staying compliant with state regulations, managing paperwork efficiently, and protecting both your business and your customers. Understanding sales tax, titles, and registrations is essential for avoiding fines, delays, or license issues.

At All American Bonds and Insurance, we help dealers navigate these requirements while staying bonded and insured. Here’s what every dealer needs to know.

Sales Tax for Dealerships

Sales tax is a key responsibility for every dealership. Dealers must collect the correct tax on each sale and remit it to the state.

• Know your state rates: Some states use flat rates, others vary by county or city.

• Understand exemptions: Wholesale transactions or trades may be exempt.

• Document everything: Keep accurate records of taxes collected and remitted for audits.

Failing to properly handle sales tax can result in penalties or jeopardize your dealer license.

The Car Title Process

Vehicle titles prove ownership, making correct handling crucial.

• Trade-ins: Confirm the seller’s title is clear of liens.

• Sales: Complete title transfers promptly and accurately.

• Financing: Include correct lienholder information for financed vehicles.

Mistakes in title handling can lead to legal issues and customer dissatisfaction.

Vehicle Registrations and Temporary Tags

Dealers must handle vehicle registration paperwork and provide temporary tags where required.

• Temporary tags: Follow state rules for issuing and tracking.

• Registration packets: Submit forms and fees promptly to the DMV.

• Customer communication: Keep buyers informed about their official registration and plates.

Proper registration processes improve customer trust and protect your dealership.

Stay Organized and Compliant

Consistent documentation, staff training, and using a Dealer Management System (DMS) help manage sales tax, titles, and registrations efficiently. Streamlined processes reduce errors and improve customer satisfaction.

Protect Your Dealership with Bonds and Insurance

Even well-run dealerships can face challenges. Having the right dealer bond and garage liability insurance protects your business, ensures compliance, and strengthens your credibility with customers.

At All American Bonds and Insurance, we make it simple to get bonded and insured so you can focus on growing your dealership.

👉 Get a fast, easy quote at QuickerBonds.com and protect your dealership today.