Business owners often have a lot to think about. From weighing bright ideas and establishing systems for growth, to juggling clients, regulations, and inventory, it can be both an exciting and stressful time for small business owners. With all the many responsibilities each vying for an owner’s time and attention, it can be easy for sales tax obligations to slip through the cracks.
And yet, failing to comply to nexus standards can be a serious liability for a business, with a chance of high penalties and problems in the wake of an audit.
It’s no secret that sales tax can be complicated, so to help your business stay on the up-and-up, here are three common mistakes small businesses make and how to avoid them.
1. Neglecting Sales Tax Completely
If you’re not sure if your business or the product you sell requires sales tax, don’t just ignore it altogether. Research nexus and how your business applies to the various state sales tax laws in which you operate.
Are you a brick and mortar business? Check your state to see what obligations apply. An online seller? While this Supreme Court case might be changing the rules soon, for now most online retailers use economic nexus to determine whether or not sales tax is required.
Remember, not collecting sales tax can bring some serious penalties to your business, so don’t risk it!
2. Getting the Numbers Wrong
With sales tax regulations as numerous as the states and jurisdictions who require it, keeping track of the percentages and amounts can be tricky for small businesses – not to mention time consuming – while reporting the wrong numbers can cause potential fees.
To help ensure that your figures are accurate, consider investing in a tax professional or sales tax tool that will consolidate all your records in one place.
3. Missing Filing Due Dates
Forget when and how to collect sales tax, the filing procedures alone are enough to make a business’ head spin. But missing a due date or filing incorrectly is sure to bring on high penalties or non-filing fees, so be sure to educate yourself on what’s required and when.
Do you know your filing due dates or how often they should be submitted? Mark your calendars and set reminders to ensure you file on time, while always checking that regulations haven’t changed recently. Most states require businesses to file each period, even if they don’t have any sales tax to report.
Like all tax issues, sales tax may seem complicated at first, but with proper planning, resources, and education, it doesn’t have to be hard. Take some stress out of your business and get acquainted with your sales tax obligations today.
If you need help with your bookkeeping including sales tax calculations and filings, we are here to help. Contact us today at 310-534-5577 or [email protected].
