Taxable Sales & Choosing the Right Sales Tax App

Описание: Hi everyone.

Today’s tax tip is about sales. Specifically categorizing sales correctly. All sales fall in one of two buckets. The sale is either taxable or nontaxable. Once a sale has been categorized, it is important to figure out how that categorization affects you or your client’s sales tax responsibilities. And how sales tax apps can help.

If a sale is categorized as taxable, it is important that you know whether you are required to register to collect sales and use tax in a jurisdiction, the taxability of associated fees, including shipping and handling charges, the appropriate tax rate, etc.

If the sale is not taxable the reason why must be documented. Is the item sold not taxable due to the tax-exempt nature of the customer? Is the item not taxable because it is not taxable in the jurisdiction? Is the item not taxable because it was shipped out of state? There are myriads of reason why something may not be taxable. It is important to document why sales tax was not charged (in real time, whenever possible) and retain that information and all supporting documentation including certificates, shipping documents, etc. for at least three – four years.

Depending on the complexity of the business, number of locations, etc., automation may be something that should be considered. Apps and software can make sales and use tax compliance a lot easier. How to choose the right app is a complicated question. It depends on your sales levels, complexity of your business, what you selling, the jurisdictions where you do conduct business , etc.

Whatever sales tax app you choose, it must meet the needs of the business. It must be easy to use, cost efficient and integrate with your accounting software.

The end goal is to make sales and use tax compliance as easy as possible.

And that is your tax tip.

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