With the freedom of being self-employed comes the enormous responsibility of paying taxes. If running a business wasn’t hard enough, keeping up with changing tax laws in all of the states can seem impossible.
In addition to your own personal income tax and your business tax return, if you sell goods to the public you also may be required to collect and pay state sales tax. A tax professional makes your business easier by maintaining your records, navigating complicated tax regulations, and ensuring your paperwork is filed in the right way, with the right place, at the right time.
What is Sales Tax Preparation?
If you run a business in any of the 45 states with sales tax, you will quickly become familiar with the rules and regulations regarding sales tax prep services. Sales taxes are collected by the Department of Revenue as a fee for the privilege of selling tangible personal property at retail. If you fail to collect taxes from your customers, then you may be held personally liable on any unpaid sales tax.
Many of the states also administer the use tax and requires reports based on gross receipts from retail sales on a monthly, quarterly, and annual basis. The sales tax return format, taxable items, and due dates are different in every state, so it is important you have an accounting professional that understands the laws in your area. If you’re late with the sales tax return or you underpay installments during the year, you may be subject to penalties and interest on top of your sales tax due.
With our sales tax prep services, we perform all of the work to relieve the administrative burden that most business owners are not qualified to carry. Our dedicated sales and use tax experts and resources go to work for you to avoid costly mistakes down the road. With accounting information access or reports on your monthly cash register, we can take care of the following sales tax preparation processes:
- Return preparation, review, and submission
- Payment remittance (check or electronic funds transfer)
- Notice prevention
- GL reconciliation
- Standard and custom reports
- Guidance, consulting, and support as needed
What Is the Difference between Sales Tax and Use Tax?
This is an important distinction because some businesses are required to file both sales tax and use tax (while others only need to file one or the other). Sales tax is based on items you sell during the course of business. Use tax is based on items you purchase for use in your business that you paid (or should pay). If you file the wrong one, you can be subject to additional fines and penalties.
When Are Sales Tax Returns Due?
Filing deadlines vary from state to state. This becomes critically important if you run a bakery in Kentucky and deliver wedding cakes to someone in Indiana. Every state has a different tax cycle including what day, month, and quarter payments are due.
What If I Run a Business Online?
Online businesses often have complicated sales tax requirements. For huge online businesses like Amazon, they keep an entire staff of accountants who roll out sales tax reports in their sleep. For a small online vendor or startup company, it takes a whole lot of time and paperwork to file returns every quarter or every month, (depending on who happened to buy your product in the last 30 days and where they live). Recent changes have attempted to make reporting easier for online businesses, but it is still required and still takes several hours unless you have a professional who can create the reports for you, stay updated on current rules, and ensure you stay compliant month to month.
What is a Nexus?
Nexus is a term used to describe the requirement for companies doing business in a state to collect sales tax in that state. This particularly effects online businesses who may not have a physical building in any state. Your nexus determines where and when you file sales tax returns, which is critical for remaining compliant. The term nexus constantly changing due to the constantly evolving nature of online business. A nexus may refer to sales tax and not necessarily refer to income tax or other areas of tax preparation. You may have more than one nexus depending on your business operations.
What about Tax Exemptions? Am I Still Required to File?
Some customers may be exempt from filing returns, like charitable organizations, but you are still required to file sales tax forms based on gross sales. Not understanding exempt requirements, and failing to collect the correct information from exempt customers can lead to problems down the road when the taxing authority in your state requires documentation on tax exempt customers.
Because of the complicated nature of sales tax preparation, we meet with each business to determine your needs and agree to a fixed cost based on the size and nature of your business. There is no cost for an initial meeting to discuss the needs of your business.