The sales tax can be complicated and time-consuming to calculate. It’s confusing for everyone, and there are so many variables, that it can be challenging to get right. Here are some pointers for understanding the general rules of sales tax. Next time you have to deal with it, your life will be that little bit easier.
Get some help
Sales tax can be extremely confusing, primarily if you’re operating a business in multiple states. If you can afford it, it may be worth employing a professional to help do your accounts. This should reduce the stress of trying to keep track of your sales tax.
If you make an error with your taxes, you may have to face a tax evasion case. Tax lawyers such as goodservicetax.com will be able to help with this. If you do your research and keep on top of things, you won’t find yourself in this kind of trouble.
The ‘Need to Knows’
Sales tax is raised at the state level. Each has its own particular rules and regulations, and some of these differ significantly from state to state. Make sure you check with your local authorities to be clear on what the laws on sales tax are in your area. Rates even vary within individual districts of a state. Check the requirements in your city or county as well as the state-level regulations.
Fortunately, you only need to collect sales tax in states where you have a qualifying connection. For example, if it’s the location of your business, or you have personnel who attend work there. It’s worth double-checking the rules of the so-called ‘nexus’ within the states in which your company operates.
Different Rates Apply
Some items are tax-free or are taxed separately with varying rates. For example, in some states, tax only applies above a specific price. Essential Items such as groceries may be taxed at a lower rate. Again, make sure you check the laws for your state to see what percentage is set for the items you are selling.
How much sales tax you collect depends on a few factors. If you have a physical shop where from where you operate, then you simply charge the rate for your area. However, if you run your business online, it is more tricky. Some states are origin-based, and some are destination-based. In destination-based states, the point of sale is considered to be at the client’s address. This means you need to calculate the sales tax at the rate for their state, and not at your location. This can get complicated, so make sure you confirm which sales rate to charge.
Meeting Deadlines
Filing deadlines are usually dictated by sales volume. These typically come either monthly, quarterly, or annually, and again are different in each state. Generally, the higher your sales, the more frequently you will be required to file your sales taxes.
You should file for a tax return even if you didn’t collect any sales tax. If you haven’t made any sales when you file a return, you are required to file a zero-return. In many states, you can have your sales tax permit revoked if you fail to file your zero-return.
Some states offer a sales tax discount for filing before the deadline. Spending time recording and filing your sales tax and returns can be a lot of effort. Some states allow you to keep a portion of what you file as an appreciation for you getting it done.
If your state gives a sales tax discount, make sure you know how to claim it. This is important to be aware of as your competition will be taking advantage of it, for sure.
Conclusion
Sales tax can be a complicated and time-consuming process. If you can, get some outside support from a business service. If you do choose to deal with the sales tax yourself, be continually vigilant about keeping track of your sales.
The most important thing to take away from this article is to check the laws, regulations, and rates in your area, and make sure you get your sales tax returns in on time.
