4 Most Important Sales Tax Questions to Ask
New to business or an old veteran, knowing your sales tax liabilities is important to operating a business. The problem is that not every business gives thought to how to handle sales tax. Many businesses make assumptions based on things they’ve heard that might not be 100% true. Instead of making assumptions about your sales tax, ask yourself these questions and get on the right track.
4 Important Sales Tax Questions for Any Business
- Where does my company have nexus? Maybe the most important question to ask of all, determining what transactions you need to collect sales tax for is the first step to really getting to the bottom of your sales tax liabilities. If you’re new in business, this is one of the pivotal steps in getting your business set up because it means filing for sales tax permits. For those who have been in business for some time, reviewing your nexus is imperative to getting sales tax right—and avoiding crippling audits.
- What products and services are taxable in those states? Only a service based business? That doesn’t mean you don’t have to collect sales tax. Keep in mind that every state has different laws on what’s taxable and what isn’t. While in your state there might be one set of sales tax rules you know well, never assume that’s the case elsewhere. For every state where your business has nexus, look into the taxability of what you sell and if there are any special rules and regulations for taxing those items in your inventory or services.
- How often do I need to file sales tax and who do I send it to? There’s a reason why April 15 for income tax sticks in every American’s mind. Tax deadlines aren’t something to be ignored. Unlike other kinds of taxes, sales tax deadlines vary by state and are often determined by how your business files and how much tax is due. Investigate when your company needs to pay sales tax and how you’re required to report. E-Filing comes in a few different forms and is typically the easiest way to file sales tax regularly. Getting software to help can make this step a lot easier!
- How accurate are my sales tax calculations? All sales tax engines make mistakes. We’ve seen error rates hover between 4-7% but it can be significantly higher in some instances. Preparing for a potential audit also means being aware of these issues and taking care of them before they cripple your business. We can tell you in just a few minutes what mistakes your sales tax software is making.
Sales tax is confusing—but it doesn’t have to be. Just take it one step at a time.
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