You might be wondering how to do sales tax, in other words, how to be sales tax compliant. I’ll be honest, taxes are a complicated part of the business. I live in tax-free New Hampshire, but there are many others who don’t. Today I’ll dive into the topic of sales tax compliance to help you prepare for the end of year tax returns and be on track to stay sales tax compliance all year round.
What is Sales Tax Compliance?
This process is usually an 8 step process that’s often repeated over and over again until you’ve documented all sales tax received. If you’re not good with numbers, then you may opt for using sales tax software. I know that wayfair tax compliance helps you along the way. Making the process of being sales tax compliant easier.
How to be Sales Tax Compliant
There are 8 steps to the process of being sales tax compliant:
- Gather the Data – Gather up all of your financial data, including financials from different branches of your business, as well as other third-party payment processes.
- Evaluate and Reconcile – Just like you’d reconcile a checkbook, peek at the data gathered and evaluate it. Reconcile it so you have a financial statement of sales tax data. Sales tax collected, sales tax accrued, and sales tax collected vs sales tax due will help with keeping up with sales tax regulations.
- Populate the Tax Return – Using wayfair sales tax nexus you can easily popular a tax return to help you stay sales tax compliant. Use the data that you collected and evaluated to popular your business tax return.
- File Tax Return and Pay In – This is the part of being within the guidelines of sales tax compliance that can cost you loads of cash. My best advice is to stay on top of your sales tax data all year round so that you’re well-prepared for the end of year tax filings.
- Reconcile Bank and Confirm Payments – Always confirm that the sales tax payment was received and confirm this information by looking at your business bank account.
- Create a Tax Calendar – Now that you’ve gone through the process of staying tax sale compliant, you should create a tax calendar. This will help you know when you should pay sales tax into the government and help offset end of year sales tax expenses.
- Respond to Notices – If you get a notice from the government that there was an error in your sales tax filing, then always respond to these notices. I’ve seen that many are scared of sales tax compliance so much that they ignore important tax messages. Always respond appropriately to notices regarding sales tax compliance.
- Repeat steps 1-7 to remain sales tax compliant all year round. You could also hire wayfair nexus to help keep your business running smoothly by helping you stay sales tax compliance.
Tips for Sales Tax Compliance Busines with Partner
Going into business with someone is a BIG deal. Make sure you lay out all of the plans, to include what percent split the income and tax brunt will be so that you’re not left like me a mom of three paying over $13 grand in taxes that were morally supposed to be partially another person’s problem too. Thank goodness I am no longer part of that business, or else I’d be worse off now. Without a written contract, you’ll be stuck with the responsibilities of sales tax filing and all of the pay in requirements. This is why I love researching things like the wayfair tax policy to stay up to date on what I need to know as a business owner.
This information is meant to inspire you to find more information about being sales tax compliant in your business. I am not an accountant, therefore, I cannot tell you exactly what to do with your business sales tax compliance. I am merely helping you to find a way to use sales tax software to always be in compliance.