South Dakota’s Top 10 Sales Tax Errors
South Dakota rounded up the top 10 errors they catch during sales tax audits and six out of ten solely concern use tax. Use tax is one of the most baffling parts of sales, excise, and use taxes and if your business isn’t paying attention to it, you might be setting yourself up for trouble. The rest of the errors, however, have to do with record keeping. Record keeping is a lot easier to fix than use tax for most businesses and should be your first priority when it comes to keeping your sales and use tax in order. It seems like we should be saying that paying sales and use tax correctly would be the top priority—and for most businesses it is. But when your business keeps impeccable records, that also means your business is doing the other parts of the equation better.
For instance, one of the top errors in South Dakota is giving exemptions to taxable entities, like churches and 501c(3) entities. If you had great record-keeping systems in place that prevented sales tax from being taken off an invoice without an exemption certificate, you wouldn’t make this mistake. With good record keeping, your business is doing things the way it should and staying out of audit territory. Part of great record keeping is making sure your records are complete and accurate. The top error South Dakota auditors found was underreporting because of poor records. Incomplete data means incomplete sales tax filings—and that just might mean an audit and costly fines.
Take a good look at your record keeping and think about how accurate and extensive your records are. Do you have an exemption certificate for every sale you make? Do you have accurate invoice information to correctly calculate sales tax every time? Do you have a process in place to self-audit your information for every sales tax return? If you can’t answer yes to all of these questions confidently, it’s time to get your sales tax in gear and stop committing errors that could put the business at risk. Sign up for a free evaluation today to find out how
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