As business owners, our bottom line is always a top priority. It's a delicate balance to maintain, and we do this by increasing sales or by reducing costs. But one method that is often overlooked is charging and remitting sales tax.
Every state in the country that has a sales tax also has a use tax on services and goods. Use tax applies to the routine purchase of such items as consumables and office supplies, as well as to the purchase of large fixed assets.
Therefore, there is the potential for the state to assess a hefty fee. Many of our clients knew nothing of this until the auditor took a look and assessed penalties and back taxes.
To guard against this, we must effectively ascertain use tax applicability - though this can quite expensive for businesses of all sizes; especially larger ones. The more locations a business has, the more complex use tax becomes.
It's important to acquire exemption and resale certificates; certificates that enable your customers to purchase items from you tax free. If you can automate the process of enforcing compliance for each tax jurisdiction in which you do business, you will eliminate so many potential headaches in tandem.
As a business owner, you'll definitely want to make sales tax a priority. Otherwise, noncompliance can and will become an expensive and inconvenient problem down the road. There are 5 important things you'll want to keep in mind:
- Learn about Remote Seller Nexus
- Stay aware of what services are taxable in your state
- Know your product's taxability exposure
- Keep good records of exempt transactions
- Have a compliance action plan for the year
For more information, be sure to download the
"Sales and Use Tax Compliance for Dummies" eBook for free. It'll serve you well.
Until next time...
