- If appropriate for your business, obtain sales tax collection license
- Verify when you are required to file reports and payments (monthly?)
- Verify which items are subject to sales tax
- Create reports to sales, exempt sales, and sales tax payable
Obtain a Sales Tax Collection License
|
|
Please remember to check all current rules regarding licensing with the appropriate local, state, and federal agencies or an attorney prior to make firm plans. This is simply what I believe to be true at the time I wrote this for my situation.
You are generally required to collect sales tax on purchases made within states where you have a physically presence. In our case, we collect sales tax on all purchases made in four states. We include the state of our primary and secondary office, as well as two states where we sometimes make sales calls.
Each state has their directions as to what items are subject to sales tax. For example, in some states, you are not required to collect sales tax on services or sales of food and other related items. Verify with your state what items are subject to sales tax collection. Therefore, in your accounting software, you will indicate for each item the tax status. When you run a tax payable report, you will see a break out by state and by tax status (exempt and non-exempt).
Once every month (states where you have less activity may switch your payment schedule to quarterly), we fill out reports showing total gross receipts less non taxable sales. Some states allow you to keep a very small percentage if you file your return on a timely basis. I've found that the paperwork associated with the sales tax returns is minimal.
You can run reports from your bookkeeping software to determine taxable sales by state. I set-up spreadsheets in Excel to mirror the forms and this makes it easier to complete the form accurately each month and also creates a back-up of what I reported. I also photocopy the forms I send in.
©2002 Track Marketing Group, Inc. - All Rights Reserved.