Collecting & Filing Sales Tax for Your Business

Collecting-Filing-Sales-Tax-for-Your-Business

โ€œSo do I need to worry about collecting & filing sales tax for my business? ๐Ÿค” And if so โ€“ what percentage or amount do I need to charge?โ€

Hoo boy โ€“ this is actually a surprisingly complicated question ๐Ÿ˜ฌ

Hereโ€™s why:

๐—˜๐—ฎ๐—ฐ๐—ต ๐˜€๐˜๐—ฎ๐˜๐—ฒ ๐—ถ๐˜€ ๐—ฑ๐—ถ๐—ณ๐—ณ๐—ฒ๐—ฟ๐—ฒ๐—ป๐˜

There is no universal federal sales tax rate โ€“ sales tax is determined by each individual state, therefore the rules and rates and filing frequencies differ from state to state.

And itโ€™s not just state taxes โ€“ there are also local taxes (like county and city) to factor in as well.

๐Ÿ—บ๏ธ ๐—”๐—น๐—น ๐—ฝ๐—ต๐˜†๐˜€๐—ถ๐—ฐ๐—ฎ๐—น ๐—น๐—ผ๐—ฐ๐—ฎ๐˜๐—ถ๐—ผ๐—ป๐˜€ ๐—ผ๐—ณ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฏ๐˜‚๐˜€๐—ถ๐—ป๐—ฒ๐˜€๐˜€ ๐—ฎ๐—ฟ๐—ฒ ๐—ฎ ๐—ณ๐—ฎ๐—ฐ๐˜๐—ผ๐—ฟ

What if your business is located in Ohio, but you have a warehouse located in Pennsylvania? Or a salesman located in Illinois? Did you travel to Kentucky to sell your goods at a weekend convention?ย  That all has an effect, too.

(And donโ€™t get me started on the confusions and complications of drop-shipping and Amazon Fulfilment)

๐Ÿ“ฆ ๐—ฆ๐—ผ๐—บ๐—ฒ๐˜๐—ถ๐—บ๐—ฒ๐˜€ ๐˜„๐—ต๐—ฒ๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐˜€๐—ต๐—ถ๐—ฝ ๐˜๐—ผ ๐—ถ๐˜€ ๐—ฎ ๐—ณ๐—ฎ๐—ฐ๐˜๐—ผ๐—ฟ

While some states require you to collect sales tax based on your business location, most states are โ€œdestination-based. Therefore, you need to factor in the buyerโ€™s ship-to location.

๐Ÿ’ฐ ๐—ฌ๐—ผ๐˜‚๐—ฟ ๐—ฎ๐—บ๐—ผ๐˜‚๐—ป๐˜ ๐—ผ๐—ณ ๐˜€๐—ฎ๐—น๐—ฒ๐˜€ ๐—ฎ๐—ณ๐—ณ๐—ฒ๐—ฐ๐˜๐˜€ ๐˜๐—ต๐—ถ๐˜€ ๐—ฎ๐˜€ ๐˜„๐—ฒ๐—น๐—น

Depending on the state, if youโ€™re physically located in State A and selling in State B, you donโ€™t need to collect sales tax in State B until you cross a certain sales total minimum (like $100k in sales)

So again – this simple question doesnโ€™t have a simple answer ๐Ÿ˜…

However, here are a couple of amazing resources to help you figure this out for you and your business:ย 

This article from Bench about sales tax basics:

https://bench.co/blog/tax-tips/sales-tax-basics/

This amazing state map tax tool from Taxjar:

https://www.taxjar.com/resources/sales-tax/states

This video walks you through how to set up sales tax in your Quickbooks Online account:

Hopefully, one or more of those resources can help clarify the sales tax needs specific to you and your business!ย 

What about you?ย  How do you handle sales tax management in your business?ย  Iโ€™d love to hear your favorite tricks + tools!

โ€ฆ Or maybe right now youโ€™re thinking, โ€œIโ€™m not even up to date on the BIG things, like client payments โ€ฆ let alone sales tax rates!!โ€ ๐Ÿ˜“

No worries โ€“ Weโ€™ve got ya covered โค๏ธ We help our clients with this kind of stuff, from catch-up services to monthly management, on a daily basis. And weโ€™d love to help you, too! www.chooseabacus.com