5 Tips to Manage your Sales Tax Liability
One of the unfortunate realities of running a business is that there are always expenses that need to be paid and not paying debts could close your doors for good. Money management, including sales tax liability, is one of the most important tasks your financial personnel tackle. From day to day costs to important tax expenses, negligence is unacceptable.
However, the reality is that keeping up with ever-changing sales tax filing deadlines can cause a headache for even the most organized business owner. Human error and lack of knowledge can all conspire to work against efficient sales tax accrual.
So what can be done to make sure your company always pays your liabilities on time, specifically those for sales tax?
Managing Sales Tax Cash Flow
- Review Your Numbers Regularly: Monthly ERP checks can help catch small errors before they get out of hand. If the business under collects from customers they are responsible for covering the difference, in addition to automatic fines assessed by the state. Business with small margins can not afford any errors.
- Maintain Separate Accounting Tracking For Sales Tax: Money you receive as sales tax isn’t technically part of your profit. By keeping tax separate by a subsidiary account a business can nip errors quickly by state.
- Paying Sales Tax Timely: The faster you remit your sales tax, the greater discount allowance given by many states. Discounts can adds up and depending on where you do business, it can be a significant amount.
- Know When Your Receivables Are Due: Know by what date your customers should have paid you and have early payment incentives and delinquent collection procedures in place if you are accrual based business. Failure to pay or late paid invoices by customer does not relieve you for filing and paying timely.
- Know Your Sales Tax Filing Date: Do you need to make prepayment or file early? If so, you will need to know how weekends and holiday can accelerate your due date. Filing late by one day can result in a full month’s interest assessment.
- Use Technology To Your Advantage: Sales tax software is efficient and helps eliminate human error. Mistakes that could take a skilled accountant weeks to find can be assessed in minutes. But not all software is the same. Form software that generate paper returns just puts number in the boxes, right or wrong. Does selecting a company that only generates paper returns really make sense?
For customers looking to manage their sales tax liability and mitigate unknown cost, Sales Tax DataLink offers free comprehensive evaluations with software that validates, alerts and safeguards the entire sales tax cycle. We provide a trusted and proven option for sales tax compliance.
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