In part one of this two-part blog series, we went over some basics on sales tax compliance for growing businesses. This is a vital area for any company, and especially as you grow and look to scale up your business, avoiding any compliance issues is very important.
At SalesTaxSolutions.US, our numerous business sales tax services include things like compliance reviews and other resources that will ensure you’re in compliance with regulations at all times. While part one of our series went over basics like confirming you have nexus in your state, confirming product taxability and registering for sales tax permits, today’s part two will look into a few other important sales tax compliance concepts to be considering for any growing business.
Collect Sales Tax Through All Channels
Once your permits have been properly obtained, it’s time to start collecting and filing sales taxes. This includes all of your sales channels, from online retail stores to physical storefronts. The same tax rate should be applied across the board and collected from the customer at checkout.
In most states, there will be two options for how you collect sales tax:
- Origin-based: All sales tax is based on the seller’s location.
- Destination-based: All sales tax is based on the buyer’s location.
It’s important to know that states also have different “nexus” rules, which come into play in determining how you’ll approach collecting and filing sales taxes. Make sure you’re aware of your state’s rules so you’re in full compliance with the laws.
Remit Sales Tax on Time
Sales tax must be remitted to the state or local governments that it was collected from by the due date or risk a penalty or interest charge. Each state may have different times for when sales taxes are due, and this will change depending on your filing. Make sure you’re aware of these.
Report Sales Tax Collections
As you’re preparing to file sales tax filings each year, you’ll need to be sure that all of your sales tax collections are properly reported. This includes all of the sales tax you collected from customers and any taxes paid out-of-pocket.
It’s important that your reports accurately reflect how much sales tax was collected, as well as which rates were applied and whether or not it was origin or destination-based.
Filling Your Returns
Finally, when it’s time to actually file returns, there are a few things to remember. Most states allow this to be done online, and some have specific forms that need to be filled out.
Make sure you’re also keeping track of all relevant paperwork – invoices, receipts, etc. – for any applicable sales tax filings, as this will be needed to back up any claims or numbers reported on the return.
With the right understanding and approach to your sales tax compliance needs, you’ll be in a great position to grow your business. For more on this, or to learn about any of our sales tax reporting, nexus determination or other business services, speak to our team at SalesTaxSolutions.US today.