You’ve been in business for a while and have been serving a few customers in another state. Finally, you got around to registering your business in that state and getting sales tax in order. To save yourself some money, you decide to put the date of filing as the day you started doing business rather than the date of the first taxable transaction in that other state. It’s a minor, little white lie, right? Wrong—you’re putting your business and yourself at serious risk. When you put not-quite-true information on your business registration forms, you’re creating a far worse outcome for your business than if you’d instead put the correct information and paid past sales tax. When you lie on business registrations, you’re creating a fraudulent business. It can mean jail time in some states, closing down your business, or hefty penalties to pay that far exceed sales tax penalties.
Some people decide to weigh out the risks of getting caught lying on their business registration by doing what they think of as simple math. “If I register my business for today’s date, I won’t have to pay x dollars in back sales taxes. I probably won’t get caught. If I do, I’m sure I only have to pay z in fines. X is more money than z so it makes sense.” When your business is fraudulent, there are all kinds of issues wrapped up in it and it can easily turn into a $200,000 mistake. If you’ve been doing business in a state without collecting sales tax, register and start doing so immediately. Pay your back sales tax and do it right. States are getting smarter and looking for problems with business registrations and they’re more likely than ever to be on the watch for fraudulent activity. They’re also looking for businesses to make examples of for the greater community. Do you want to be the poster child for fraudulent business registrations to avoid sales tax? We didn’t think so either.