by Gail Cole
Tax is not what most businesses do. But taxes still have to be done. Registrations must be obtained and returns must be filed, correctly, and on time—or pay the fine.
The challenges of filing and remitting sales tax returns vary depending on the jurisdictions and businesses involved. For a small mom and pop store with one location, limited inventory, and no online presence, filing returns could be relatively straightforward. In certain jurisdictions, however, it could be a real headache. As a general rule, the bigger or more complex the business, the greater the tax pain. An Internet retailer with customers in multiple states or a subcontractor that sells goods and services both wholesale and retail in multiple jurisdictions will indeed have their hands full.
Dealing with sales and use tax mandates plenty of elbow grease and a certain amount of discomfort, but it’s for the greater good. And frankly, it’s good when you’re not in it alone. What’s better? Getting someone else to do it for you!
Sort out your issues
Every state puts its own unique imprint on rules and requirements, and every seller has to comply. Compliance triggers pain points ranging from confusion over who needs to register when, to differing filing due dates and requirements. The first step is figuring out what you need to do to improve your routine, which processes need to be kept and which can be improved.
State tax authorities know filing sales and use tax is a hassle. To help beleaguered taxpayers, many state departments of revenue (including California, Connecticut, and Maryland) list common tax problems and solutions on their websites. Examples include:
- Problem: I do business in a state but have never registered or filed sales tax there.
- Solution: Register ASAP and file past-due returns.
- Problem: I withdrew items from my resale inventory for my own use.
- Solution: Report and pay use tax on the purchase price of the goods.
- Problem: I have unsupported sales for resale.
- Solution: Retain old resale certificates and update resale certificates regularly
Take this time to figure out the problems that most concern you. Be proactive. As with anything, waiting always agitates your challenges.
Streamline your process
The fact that State Departments of Revenue recognize the pain involved in sales and use tax filing and offer solutions is a positive first step. But it doesn’t quite get at the heart of the matter. Many SMB’s don’t want to spend the time, energy, or resources required to properly manage sales and use tax compliance. They feel their time is better spent elsewhere. One solution, depending on your ERP system, could be Sage Sales Tax automation software. It will help you roll up your sleeves, clean house, and easily facilitate your sales and use tax filing and remittance.
April may have been the cruelest month because of tax returns. But with Avalara handling sales tax calculation and filing, you can look forward to next spring—and many happy returns. To learn more about how you can be better prepared next time around, download the “5 common sales tax registration and filing errors” whitepaper http://bit.ly/22iwSmn.
About the Author
Gail Cole is a sales tax expert with a penchant for digging through the depths of BOE sites and discovering and reporting rate changes across the country.
Reprinted from the Summer 2016 issue of Bellwether.
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