Yes, it’s one of those bookkeeping tasks that can be confusing, time consuming and frustrating…and that’s if you are only filing in one state!. If you file in multiple states or a state that has multiple jurisdictions, it can become almost too much to endure. And yet, it is a task that most small businesses must deal with. Let’s look at a few solutions to this headache that may make your life a bit easier.
Before you go any further, it’s critical to know if you should or should not be collecting sales tax. This is a question best left to a CPA. In light of the South Dakota v. Wayfair case, it is very important for all SMB’s to understand this and collect sales tax if appropriate.
Like anything else that is new and a bit confusing, start by understanding the process. If you collect sales tax, you need to remit it to the state. It’s actually their money. So, the first thing to do is to find out how often you have to report and submit sales tax. You can find this on your state’s website. Depending on the size of your business, you may need to file annually, quarterly, and monthly.
Once you know you need to file, you will need to have a reporting system that will tell you how much you owe for each sale, as well as reports that summarize your sales tax requirements by state and/or jurisdiction. Last, you’ll need a way to track and separate the sales tax you’re collecting from your customers, so you always have the proper amount set aside to submit when you file your sales tax return.
This is one of the biggest mistakes that SMB’s make, and we cannot stress this point enough…DO NOT comingle the sales tax you’re collecting with your operating funds. If you do, there is a strong possibility that you will use those funds in your day-to-day operation and not have enough money to pay your required sales tax.
If you don’t want to go through all the work of planning, managing, and reporting your sales tax, there are other options. There are now software applications and service providers that will help you track, manage, and pay your sales tax. This is a fairly new and growing industry and one that has a lot of promise.
At Expex, we built our app to fully support the financial tasks SMB’s need to perform each day and every month…. Including sales tax returns.
Carly is the last bookkeeper you will ever hire. She knows how to prepare these sales tax returns for every state, so you don’t have to. Let us introduce you to Carly. Your sales tax return troubles will be over!
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