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Have you Blundered on these Common Sales Tax Errors?

May 12, 2018 by OSYB Staff

As a business owner, you are charged to collect sales tax from the buyer upon the sale of goods and services  and to pass the tax dollars on to the government.  It sounds like a simple business routine to follow.  Apparently not so, as there are minor deviances in sales tax percentage by state and the profit recognized on sales may vary from state to state.

Intuit QuickBooks shares 9 common sales tax missteps to watch out for, here are a few:

  1. Not understanding state nexus – Make sure you understand the nexus and how it is used to assess sales tax.  Otherwise you will not be collecting the appropriate state taxes required on company sales.
  2. Not pricing profit margins by state – Sales tax charges vary from state to state so you must know the percentage sales tax charged in each state where you are doing business.
  3. Missing Sales Tax Exemptions – You need to know the sales tax exemptions which also vary.  Collecting sales tax on exempt transaction creates unnecessary work and you overcharge your customers.
  4. Misusing Sales Tax Collections – Sales taxes are to be collected and submitted to the government in a timely manner.  “At a minimum, this sales tax mistake will result in fines and penalties, and not submitting sales taxes is likely to create a legal problem for the business owner. “

As you can see dealing with the collection of sales taxes is not such a simple issue.  You should consider consulting a CPA that specializes in sales tax to help you initially set-up methodical sales tax collection procedures.  Follow-ups with the CPA are recommended if there are changes in the sales tax regulations.

Read more:  9 Common Sales Tax Errors You Didn’t Know You Were Making

 

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