If you are a business owner who is into selling any product/services that are taxable, then you must set up a process to collect and pay your sales taxes and file sales tax regularly.
However, if you are selling your product/service in Alaska, Delaware, Montana, New Hampshire, and Oregon, then you do not have to deal with the complexities of sales tax.
But I am here to help you get through the complexities of the sales taxes. Make sure to read through the entire article to know more, and there is a lot of valuable information here.
The complications of sales tax
For sales tax, there are different local taxation authorities involved and all of them have their tax implications for different services/products.
Also, if you are an online seller, then you need to have a system to maintain sales tax on your business transactions.
Once you have collected the sales tax from your customers, then you must pay the same to the tax authorities on selling your products/services.
To do it manually, here are some of the steps that you need to follow:
- Firstly, you have to be sure that your business is eligible for sales taxation in your state.
- Enrol your business with your state’s taxation agency. If your business involves selling in multiple states, then you have to register with the other state as well. Also, you have to check with the tax information on the taxation of your products/services.
- Compute the sales tax percentage that you are going to charge on your product. However, this can be tough because there are more than eleven thousand tax collection authorities in the United States. Therefore, making it more complex.
- Setup the final sales tax collection process to compute and collect taxes from your sales. You might be selling online/retail stores or any other market.
- Charge sales tax on your sales to your customers.
- Prepare the records of your sales and taxes using your business accounting system.
- Send reports and file all your taxes to the state.
That was the steps which you have to follow to file your sales taxes in the United States. However, there are major challenges involved in filing for sales taxes.
Challenges for filing sales tax in the United States
1. Locations:
Many business owners consider zip codes for calculating a particular location’s sales rate. Today, there are more than 43,000 zip codes in the United States, and as it suggests this does not go well with other business owners. The majority of the authorities do not consider zip codes to be taxed. Therefore, calculating the exact tax is extremely tough for the majority of businesses.
2. Sourcing:
The majority of the business owners consider that the sales tax is calculated based on the customer shipping location. On the other side, many states consider the origin sourcing method in terms of interstate sales. In such a situation the business location tax rate is considered for the transaction.
3. Special Taxes:
There are special tax compliances implemented by tax authorities that act as a supplement tax for specific industry/tangible products. For example, there is an excise duty imposed on gasoline and diesel. The same applies to the sale of many products and services including alcohol, tobacco, telecom, etc.
4. Product:
Many products are exempt from taxes, and some products are taxed more than others. For example, food products are not liable for sales tax, whereas processed food is liable for sales tax. The complications come when a non-taxable product is sold along with a taxable product, then how will the sales tax calculate? Yes, this is a real problem that you might face while running your business.
5. Exemptions:
As explained earlier some products and services might be exempted from tax. For example, the sales made to non-profit organisations are exempt from sales taxes. Therefore, if you are selling to both profit and non-profit organizations, then you have to maintain a separate record for sales to the respective organization.
6. Compliance issues
When you have calculated your sales tax, then you have to file the same to the respective authorities. Also, there are different forms that you have to fill out before a deadline with specific format requirements. Any mistake might lead to compliance issues adding to the struggle of filing the sales taxes.
Don’t Worry – All Your Sales Tax worries are over now!
Your sales tax calculation complications are about to be resolved now!
All the credit goes to TaxJar, which is a sales tax compliance platform which takes care of your business’s sales tax worries. With TaxJar you will save a lot of time, which you can spend on growing your business further.
It will improve your workflow and make your business automated along with a simple easy-to-use interface for managing sales taxes.
TaxJar gives you absolute control over whether you can:
- File manually: you can check all your tax computations to have a manual check that everything is alright before you can file your tax to the authorities.
- Autofile: The highly recommended way to file your sales taxes with TaxJar is using their autofile process. Here TaxJar will do all the filings on your behalf. You do not have to do the manual calculation, and everything is done by TaxJar. Autofile is 100% free and is available across the United States. There is no additional fee required to avail the autofile feature, no matter how many transactions or taxes you have to file!
TaxJar is compatible with multiple kinds of multiple channels and platforms. You can integrate TaxJar with the following platforms:
- Shopify
- BigCommerce
- Magento
- Amazon Seller
- eBay
- WooCommerce
- Etsy
These were some of the most popular platforms for integration, but there is a long list on the websites including accounting tax, CRM, affiliate marketing, ERP, etc.
Coming to the pricing, there are three different plans as follows:
- Starter
- Professional
- Premium
All of these are available for a 30-day free trial for your business with the following benefits:
- Autofile available across all United States.
- Easy-to-use user interface that calculates your sales tax and returns.
- Excellent & Dedicated customer service.
- Educational resources to help you understand sales taxes in general.
- Multiple integrations across different platforms to calculate the sales taxes under one dashboard.
Summing up
To sum it up, TaxJar is one of the best software that you can use to resolve all your sales tax problems. It makes sure that your business stays tax compliant without any problems due to incorrect filings, wrong tax calculations, etc.
Once you know about filing the sales tax, then you can do it manually as well. As explained, manual filing is also supported by TaxJar and the educational resources will help you to grow through the process and learn about sales tax filing.
Again, TaxJar is a must-have tool, as it saves you time. You can focus on growing your business when TaxJar is taking care of your sales tax worries!
