Sales & Use Tax: The Basics
If you’re a new business owner, you may not be familiar with use tax. Most consumers are familiar with sales tax, since they have to pay it when they make purchases. So, you likely know you have to collect sales tax for purchases in your state and forward these collections to the state in the form of ecommerce sales tax returns and sales tax reports.
But you may be less familiar with use tax. A use tax is what you charge customers in other states. For instance, if the tax rate is 6% in your state and 6.5% in your customer’s state, you must charge them the higher rate. This necessitates your keeping an up-to-date list of every state’s sales tax rate.
Additionally, some jurisdictions levy a county, city, town or township tax rate as well that you have to add to the state tax. Many states also require sales tax registration for any business selling items in their state, even if it is only online. SalesTaxSolutions.US is available to business owns and accountants to field questions about sales and use taxes, and sales tax registration, and we usually can provide an answer within 24 hours.
However, a better solution for a busy ecommerce site that has customers nationwide might be a sales tax system.
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What Is a Sales Tax System?
There are many ways to set up a sales tax system, and the one you choose depends on how you run your business, what you sell and where your customers are. You likely have bought items online from sellers in other states and seen that the sales tax was automatically calculated at the rate in the state you are in. This is one reason you often have to fill out your address before you can see the amount of the sales tax.
While this seems like a simple calculation, there are variables. For instance, in many (but not all) states, some items are not subject to sales tax, such as food, clothing and medical devices. But there are exceptions. Prepared food is treated differently from groceries. Scarves and headbands are sometimes considered accessories and not clothing and may be subject to tax.
As you can see, these rules can be complicated and befuddling. At SalesTaxSolutions.US, we can design a system to manage your sales and use tax liabilities effectively. This includes policies, procedures and recommendations for software and other computer solutions.
Count on the experience of the team at SalesTaxSolutions.US to help you stay in compliance with ecommerce sales tax system design.
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That's okay! We work with any sales data. Every business has unique needs and a unique system to go with that. No need to change your system just to collect and remit sales tax. We'll work with what you have.
Here are some answers to Frequently Asked Questions.
Do I need TaxJar or Avalara to get started?
Nope. You can skip the expensive monthly subscription fees. There are a variety of different ways to automate sales tax. We’ll help you choose the best option for your business.
Can I get help with setting up sales tax collection?
Yes, we’ll assist with selecting the best sales tax collection system for your business, and we’ll assist with the setup.
What states should I collect sales tax for?
We can conduct a sales tax nexus review to determine the jurisdictions that your company should collect and remit sales tax for.
I received a delinquency notice from a state. What should I do?
Depending on the notice, you may need to file back returns with that state. We offer notice handling services, contact us to get started.
How do I know if the product I sell is taxable?
We can design a sales tax system for you that automatically determinates if the product or service you provide is taxable in a specific jurisdiction.
Can I file my returns myself?
Our services are offered individually so you may choose to have us complete a nexus determination and register accounts, but not file returns. That is ultimately up to you. We understand each business has different resources and business needs. We’ll work with you to create a custom plan to meet those needs.
What do I need to get started?
To get started you will need to send us a message detailing your business needs. After that, your tax preparer will walk you through the next steps.
Can I setup a meeting with my tax preparer?
Absolutely! Meetings are included with our services. We can do video meetings or phone calls, whichever is most convenient to you.
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