Business taxes can be complicated for first-time owners.
Staying compliant requires a lot of extra steps, and it might even require you to get counsel from an expert. That is why it is critical for you to simplify what you’re doing before it is too late.
You should have processes implemented in your business to handle sales tax returns. If that is the first time you hear about a sales tax return, you should be happy to know that you are not the only one. Filing a sales tax return is a very niche thing to do, and only a few specific businesses end up having to do it.
What Are Sales Tax Returns?
A sales tax return is exactly the same as filing your quarterly taxes, but it is only for businesses that collect sales tax during business operations. For the majority of states, this is the case, and only a few states don’t have a sales tax. Depending on the state, you are required to file your sales tax return quarterly, monthly, or even annually. It will depend on the state you are living in and what is required to get the job done.
Another aspect of a sales tax is whether you are selling online or not. Every state will have a different tax rate and various laws concerning how to sell things. It is important for you to be in compliance with all those laws, so it might not be easy to do everything at the same time. Complying with all of these different countries can be a horrifying thing as an entrepreneur because you don’t know whether you are meeting an obligation or not.
How Do They Differ from Income Tax Returns?
As a business, you have to file income taxes for the state you are in. You are also required to file federal income taxes during the same year. The difference is that your sales tax is always filed at the state level. It also has a lot more loopholes and things you have to account for because of the variety in the different state laws available to you.
Preparing and Filing Your Return
It is essential for you to avoid errors during this step because it will determine whether you have fines or any problems with the government in your state. Gathering the right information can be the difference between a year of prosperity and one where you spend most of it dealing with the taxman. The first step is gathering everything and preparing the right documents for you to start the tax filing process. It might be better for you to do sales tax filing with a professional to help you.
Making Sure You Have the Right Form
When starting the sales tax filing process, you must take the time to find the correct forms, or you will be in a world of trouble. You might even have to focus on filing use tax if your state has that as well. To find the correct forms, you might want to seek professional help, or you can go to the website for the state you are registered in. You should have all the documents you need about your business. You should also know whether you need to file these forms every month, every quarter, or every year.
Filling It Out
Once you have gotten the right form, it is all about filling it out. This is where your business accounting comes in. A good business will keep track of every transaction that it has done. It is a lot easier to do this if you are operating an online business and have accounting software integrated into your checkout process. However, for brick-and-mortar businesses, you should have software that can do this as well. A good point of sale system is critical to doing business with the brick-and-mortar store.
Paying Your Sales Tax On Time
The size of the business will have a great influence on how often you have to pay your taxes. A large business will need to pay quarterly or monthly. In fact, you might even have to pay your taxes weekly if you are a huge business. This information is something you need to know by contacting the relevant tax authorities in your state. You should also make sure that you are filing the correct paperwork on time, so you don’t end up getting audited.
The majority of states will offer an option for e-filing. You log into the website and input data into a form. You will also make the necessary payments to keep in compliance. However, it might not be worth your while to do all of this by yourself. It is quite complicated to manage a business while doing tax compliance. There are two ways to simplify your tax returns, and they are quite simple in nature, but they will differ in how much they cost and how much effort will be required on your end.
Method 1: Hire a Professional Accounting Firm
The first option for simplifying your sales tax returns is to have a professional accounting firm do it for you. You can have software to collect all of the necessary data and other forms you need, and then you can turn it over to a professional. They are more likely to understand all the necessary laws and keep you in compliance. However, these are professionals, so they will cost a lot more money for your business. If you are a large business, then this is the recommended option for simplifying your tax returns.
Method 2: Get Software to Manage It Automatically
There are many different software programs available for managing your accounts and estimating your sales tax. For smaller companies, this is a great option to ensure compliance while also automating the majority of dealing with this tax filing. However, this option means you won’t get the personalized care that a tax professional could give you. However, it will also be a lot cheaper, so it is recommended for the companies that don’t have a lot to file and aren’t that large.