Crucial Sales Tax Tips
Sales tax is obligatory for most businesses. Unfortunately, the complexity of sales tax procedures makes it difficult for some business owners to comply with the law. Especially if you have a new business, it’s easy to overlook aspects of sales tax compliance. Failure to follow the correct procedures when dealing with sales tax can put your business and your assets at risk. However, there are ways to overcome these issues and safeguard your assets. Here are some simple and crucial tips to keep you clear of sales tax pitfalls.
Know your payment schedule. Sales tax payment frequencies can change within a state from time to time. Normally if your business is affected you would receive information about it via mail or email but not always — and especially not when it’s a state where you have nexus but no branch office. So it’s important to stay aware of any possible changes in your frequency.
Update your tax remittance for new products and services. The introduction of new products and services usually attracts new sales taxes. Businesses should update their tax remittances according to the tax laws on any new products or services.
Catch errors with tax notices. A tax notice is nothing to be taken lightly. Jurisdictions should be notified in the case of any of these certificates expiring in order to avoid unnecessary tax payments. Your customers should also get new certificates in the event that your or their business name changes.
Check for prepayment requirements. Most jurisdictions have prepayment requirements for businesses with reasonably large taxes. So business owners should check the schedules of the tax payments to see whether or not they are required to make prepayments.
Identify your jurisdiction. Some business owners use their ZIP codes to pinpoint their tax jurisdictions. However, this is not advisable as it can easily lead to incorrect payments. The best way to pinpoint your jurisdiction is to actually use the geographical coordinates of your business transactions.
Validate your check process. Business owners have to constantly monitor their sales tax documents to ensure that their tax payments checks clear the bank. The Department of Revenue always notifies individuals if their payment checks bounce. However, it is best to go the old-fashioned way here and check manually to avoid late payment penalties.
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