Figuring out sales tax filing deadlines for your small business
Sales tax can be challenging to stay on top of as a small business.
First, business owners need to understand where they have nexus — that is, where they’re obligated to collect sales tax.
After figuring out where to collect tax, business owners must then register to collect tax. And only after registering can one begin collecting any actual sales tax from customers.
And even after collection is underway, the process still isn’t complete until you remit those taxes and file sales tax returns. That can be the most confusing part of all, because it has to be done in each state or sales tax jurisdiction, and each state has different requirements and deadlines (of course).
Depending on how your sales break down, you could be required to remit and file monthly in one state, quarterly in another, and annually somewhere else.
Sample state: Washington
Let’s use Avalara’s home state of Washington as an example of how the process works.
The Washington Department of Revenue assigns filing dates based on what a business estimates its total Washington tax liability will be for the year. The return is a “combined excise tax return,” which also includes Business & Occupation tax and other taxes (if they apply to the business in question). Here are the filing classifications for a business’s estimated tax liability:
More than $4,800 per year: Monthly, completed on the 25th of the month following the close of the filing period.
Between $1,050 and $4,800 per year: Quarterly, completed on the last day of the month following the close of the filing period.
Less than $1,050 per year: Annually, completed on the last day of the month following the close of the filing period.
If the deadline falls on a non-business day such as a weekend or holiday, the deadline is shifted to the next business day.
Some states provide a discount if you file early or on time, but Washington does not. And even if a business has no sales tax liability during a given filing period, if it’s registered to collect sales tax, the business must file a return according to the assigned schedule.
Should a business miss a filing deadline, Washington imposes penalties beginning at 9 percent and increasing to 29 percent depending on when the return is actually filed. Extensions can be granted if circumstances beyond the business’s control caused the late filing, but evidence may be required.
What about other states?
Businesses that sell in multiple states need to determine their obligations and deadlines for each specific state — and in some instances, separate jurisdictions within those states. We don’t have room to go through all of those here, but we’ve compiled a handy database on our Avalara State Sales Tax Guides page.
There you’ll find links for every state with details on nexus, registering, collecting, and, of course, deadlines. You can check with individual states directly to learn more, too.
Managing sales tax in different states can be confusing — and mistakes can be costly. The Avalara team is here to help, with automation solutions designed to take the pain out of calculating, filing, and paying sales tax for small businesses. Avalara Professional Services can even help you figure out nexus, handle registrations, and address other issues.
Contact us today at 877-759-6520 or avalara.com to start taking control of sales tax, instead of letting it control you.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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