How to stay smart about sales tax compliance…
Have you ever met anyone who likes taxes? Neither have we. But what’s frustrating for business owners can actually be exciting for accounting professionals. And while sales tax compliance can seem dauntingly complex, there are automation tools available to simplify and streamline compliance.
To seize on a surprisingly compelling opportunity for your accounting practice, or to learn more about how to become a hero in reducing your company’s sales tax compliance burden, you first need to understand some fundamentals:
Sales tax management is a constant component of selling goods; in fact, businesses act as ‘agents’ of the state and – depending on the product or service – must calculate and collect sales tax, and then report and file the tax to state and local authorities.
While tax compliance has never been easy for business, the Internet economy has made things much more complex. Think about it: online buying has introduced radical changes in the way we shop. If businesses can sell anything virtually anywhere to any buyers, then how do the tax authorities determine who is ‘doing business’ in their state (or region)? The answer to that question has been interpreted many different ways, since determining ‘nexus’ (geographic presence) depends largely on a state’s or region’s legislated preferences. Every state is slightly different, and those differences keep changing and growing, as states rely more heavily on sales tax revenues to fuel their budgets.
Tax compliance is a thankless job for companies, to say the least, but it’s the law and businesses are required to achieve compliance based on established laws.
As your clients’ (or your company’s) revenues grow, it becomes ever more important to make sure companies comprehend and manage their sales tax exposure while ensuring compliance. That’s where you come in.