The tax world is experiencing changes. Did you know these changes may increase tax reporting for many small businesses engaged in online sales?
Sales Tax Changes 2019
For more than 20 years, U.S. retailers need to have a physical presence in a jurisdiction. This was established before it was required to register, collect and report the jurisdiction’s sales tax.
In June 2018, that standard completely changed. The U.S. Supreme Court ruled in favor of South Dakota law during South Dakota vs Wayfair. This law requires out of state sellers with more than $100,000 worth of goods and services to collect and remit tax on sales into the state.
This established a new standard for states to follow. Setting rules on collecting and remitting sales tax.
Small business owners with the e-commerce market are now required to comply with multiple state’s sales tax rules. This also includes multiple state tax rates.
Easy Steps To Help You Files Your Sales Tax
Know Where You Have To File
Always know where you have your filing obligations. Typically in the past, retailers were required to register, calculate, collect, and report sales tax. They were required to do this in jurisdictions where their business is physically present. Post Wayfair ruling allowed the inclusion of economic presence.
Know When You Have To File & When To Pay Your Taxes
Businesses register to collect and report both sales and use tax. By doing so, this taxing authority gives your business a notice detailing Filing Frequency pert tax type.
Filing Frequency is what determines when the tax needs to be reported and paid to the tax authority.
Frequency is based on revenue set to the monthly tax due either on or before the 20th of the month after the period reported.
Sales occurring within a state. Intra-state sales.
Seller Use | Vendors Use Tax
Sales occurring between states
Consumers Use Tax
Purchase where the tax was not properly paid
For any business that ignores these different Tax Types, you risk:
- Underpaying tax for failing to file returns. Losing file discounts as well as penalties.
- Underpaying tax for applying non-qualifying file discounts that are only relevant to one tax type.
- Overpaying tax due to using the wrong tax type rate. When you report the correct Tax Types, you help minimize the out of pocket tax expenses.
Understand How To File & Pay Your Taxes
Most states are moving from paper to electronic process for reporting and paying. Therefore, always make sure to abide by all electronic requirements. If not, states may assess penalties. Even on zero-dollar returns.
Claim All Discounts & Allowances
Whether you are filing returns electronically or by paper, most states offer a collection allowance on timely file discount. Never miss an opportunity to claim a discount.
As your business grows, Stock Checks is here to provide everything you need to remain tax compliant. Should you need any Tax Forms for your business, we got you covered. For additional information on Filing Taxes or to Order Tax Forms, contact us at (888) 391-7898.