Many happy returns: spring clean your sales tax filing process
- Sales and Use Tax
- March 30, 2016 | Gail Cole
Tax is not what most businesses do. But taxes still have to be done. Registrations must be obtained and returns must be filed, correctly, and on time—or pay the fine. Maybe it’s the taxes that make April the cruelest month, and not the juxtaposition of death and life. T.S. Eliot got it wrong.
The challenges of filing and remitting sales tax returns vary depending on the jurisdictions and businesses involved. For a small Mom and Pop store with one location, limited inventory, and no online presence, filing returns could be relatively straightforward; in certain jurisdictions, however, it could be a real headache. As a general rule, the bigger or more complex the business, the greater the tax pain. An Internet retailer with customers in multiple states? A subcontractor that sells goods and services both wholesale and retail in multiple jurisdictions? Cruel indeed.
With April 15 looming, now is an ideal time to review the state of your sales and use tax returns. We’re all buried in taxes, anyway, so we may as well give ourselves an audit. Think of it as a sort of spring cleaning. Dealing with sales and use tax mandates plenty of elbow grease and a certain amount of discomfort, but it’s for the greater good. And frankly, it’s best when you’re not in it alone. Or better yet, when you can get someone else to do it for you.
Sort out your issues
Every state puts its own unique imprint on rules and requirements, and every seller has to comply. Compliance triggers pain points ranging from confusion over who needs to register when, to differing filing due dates and requirements. The first step is figuring out what you need to do to improve your routine: which processes need to be kept and which can be improved.
You’re not in this alone. State tax authorities know filing sales and use tax is a hassle. To help beleaguered taxpayers, many state departments of revenue (including California, Connecticut and Maryland) list common tax problems and solutions on their websites. Examples include:
Problem: I do business in a state but have never registered or filed sales tax there.
Solution: Register ASAP and file past-due returns.
Problem: I withdrew items from my resale inventory for my own use.
Solution: Report and pay use tax on the purchase price of the goods.
Problem: I have unsupported sales for resale.
Solution: Retain old resale certificates and update resale certificates regularly
Take this time to figure out the problems that most concern you. Here are 5 common sales tax registration and filing errors that plague many companies. Be proactive. As with anything, waiting always makes the mess worse.
Streamline your process
The fact that departments of revenue recognize the pain involved in sales and use tax filing and offer solutions is a positive first step. But it doesn’t quite get at the heart of the matter:
Problem: I don’t want to spend the time, energy, or resources required to properly manage sales and use tax compliance. My time is better spent elsewhere.
Solution: Avalara sales tax automation software. Time to roll up your sleeves, clean house, and put a system in place to facilitate sales and use tax filing and remittance.
April may be the cruelest month because of tax returns. But with Avalara handling sales tax calculation and filing, you can look forward to spring—and many happy returns.