Business is a complex and definitely a huge responsibility which many people willing take up because of their passion. There are different types of business modules today and to make sure that you are able to manage it perfectly, having the basic knowledge of the various types of taxes is also very important. The sales tax is one such variable tax that you should know about. Since the tax rules and regulations varies from one state to another, you have to make sure that the laws are perfectly obliged to so that you do not have to face any heavy penalties. The nexus of a state determines the sales tax that will be collected locally and the state jurisdiction cannot force you to pay this tax in case the laws for sales tax is not there in the specific state. There are several such intricacies which you must know about so that the taxes are accordingly paid. The following are a few important tips which you must be aware of so that the sales tax becomes easy to manage in any location.
Knowing about taxable products as per location
Since the rules and regulations of sales taxes are different in the different states, the list of products and service which are taxable will also vary accordingly. There are many states where certain services and tax are not taxable but the same items are taxed heftily in another state. Surveys by federal of tax administration are conducted often for various products and services and they have listed 185 such commodities. They are further grouped into eight major categories and you have to carefully look up the relevant list under which your services and products are likely to come. The groups are utility related services, personal services, business services, computer services, fabrication and installation related services, professional services and entertainment related services.
Make sure that you frequently review and update the taxability matrix of the company so that you unknowingly do not become liable to heavy fines. You can make this process easier by subscribing to the relevant tax change notice emails and newsletters which are sent out as soon as such changes are made. There is a table of states for federal tax administration and this table has the list of taxed services in every states. By going through it thoroughly you can make sure any fiasco is avoidable.
Do not neglect consumer use task
Consumer use task is relevant to the sales tax though it is often neglected or miscalculated which leads to many fines and penalties later when found in audits. This tax type refers to the use of tangible personal properties that are not directly associated with the sales tax. When someone is purchasing an item, they often owe this use tax provided the item is taxable. However, this tax is comparatively less than sales tax and the responsibility of the consumer use tax lies on the buyer.
However, this tax has to be paid by the business as well when it draws goods and inventory for its own use and often this part is neglected and leads to heavy losses due to penalties. It is important for the business owner to understand the basic difference between sales tax and use tax to avoid such mistakes. Also develop a written use tax policy for the company to avoid missing out on it.
Keep proper track and accounts of the inventory that are drawn for personal use to calculate the tax accurately. With a state sales tax calculator, you can easily manage the calculation and avoid any problem with taxation. There are many business owners who also hire a professional for this calculation and this is the best way to make sure that your business have all the help it needs.
You can even use the state sales tax calculator by zip code which also makes the calculation as precise as possible. But keep in mind that keeping a close tab on the updates of the nexus is elemental so that your tax compliance is smoothly maintained. This is particularly true if you have a small business where every small amount can make a big difference.
