Businesses of all kinds face greater challenges than ever in the realm of sales and use tax compliance. from day to day operations to strategic long term planning, smart companies need to be savvy about the legal and financial implications of their sales tax management processes.
Calculating, collecting and remitting sales tax (including documentation of tax exempt sales) are all areas that can be time consuming, error-prone and carry the risk for fines and penalties if mismanaged.
Here are some of the main ways sales tax can affect your business:
- Changing rates and boundaries- By not being able to keep up with the thousands of changes to rates, rules and boundaries annually, many companies risk paying less or possibly more than required and have increased audit risk.
- Aggressive taxability rules- In an effort to boost tax revenue without raising taxes, many states are expanding the interpretation of what is taxable. To ensure accuracy, businesses must stay current with these details in each state where they do business.
- Timely compliance headaches- Calculating rates is just the first step. You still need to file and remit payment on-time, as dictated by the various jurisdictions you collect in. This can be a significant drain on resources, and failure to manage this process can undo all the hard work you've put into calculation and collection. And it can lead to assessments.
- Non-taxable transactions- To minimize audit risk, you need proper documentation of each customer's exemption for each sale. And you should be able to easily retrieve this information in the case of an audit.
- Nexus- In today's sales tax environment, states are clamoring for their piece of tax revenue on sales made by out-of-state vendors. And not just internet sales. Understanding the nexus triggers of all states you do business in can not only minimize your audit risk, but can help you with strategic expansion decisions.
Don't let the auditor be the one to expose the flaws in your compliance efforts. Educate yourself on these and other areas of your business that are costing you time and money and subjecting you to unnecessary risk. Download our free whitepaper to learn more: How Sales Tax Affects Your Business