Small businesses have complained that the last few years have seen a lot of changes being done to sales tax issues. Ask any business owner about his are of concern, and he is likely to raise the entire process of sales tax filings.
This is because the process is not only complex and confusing, it also keeps changing repeatedly. In other words, the laws and rules governing sales tax issues do not seem to be fixed. They are rather quite fluid and subject to the whims and fancies of governments.
In this article, we are going to look at four top things, businesses need to know about sales tax. However, before we get to the list, let us first briefly look at Sales Tax and what it really means.
Sales Tax: Meaning and Definition
In very simple terms, a sales tax is a percentage of money paid by the buyer in lieu of buying a tangible product or service within a geographically designated taxation jurisdiction. In other words, even though businesses do not pay the sales tax themselves (as it is paid by the consumer), the responsibility of collecting the same and depositing it with the authorities rests on them.
Customers who buy goods and services, which are taxable pay the sales tax in reality. The tax is collected by the business and deposited with the taxation authority. In this case, it can be a state, county, or district, which is the taxation authority.
In the United States, there are no Federal Sales Tax Laws, which means that all the states are free to make and enforce their own laws. Sales taxes is one of the major sources of revenue for the states in the United States.
List of 4 Things Small Businesses need to know about Sales Tax-
1.Where do Sales Taxes Apply-
According to laws, sales taxes are applicable to all forms of cash purchases made by the buyer. They are also applicable to purchases made by the buyer through credit cards as well. Even if you are exchanging property, you will have to pay sales tax. The same goes for installments and EMIs. Some states also levy layaway sales and nexus state taxes in their territory.
2.What are some Taxable Goods under Sales Tax-
It is common knowledge that the list of goods and products where sales tax is applicable are endless. However, these products and goods also differ from state to state within the Federation. We have created a list of goods, which are common to all states- automobiles, furniture, toys, electronics, gadgets, plants, books, home equipment/appliances, computer and IT parts, etc.
3.Sales Tax Laws vary from State to State-
Small businesses that are looking to expand their operations in different states need to take this factor into consideration. Many businesses, which are into ecommerce, fail to take note of these factors and end up paying hefty fines in different states. Nexus Taxes too vary from state to state and businesses need to be aware of them.
4.Sales Tax Filing is Complicated-
As a small business owner, you might think that it is easy to file the sales tax. However, the reality is much harder. It is always a good idea that you employ the services of an expert for sales tax filing. This will ensure that you never miss out on the dates, have proper paperwork at hand and ensure complete compliances for your small business at every level.
The Final Word
If you are a small business looking to grow into newer states and territories, you need to understand how state taxes work. AS states are very particular about this revenue-generating tax for themselves, they come down harshly on businesses looking to evade or delay the same.