5 Sales Tax Mistakes To Avoid In 2021
by Arina Smith Sales 26 March 2021
Most of the resellers in the USA make some common mistakes while they have to pay the sales tax to the government. You must avoid these mistakes to keep your record clean. The terminology for the sales tax can prove to be complicated at times. Do not allow the complications of the sales tax to complicate the affairs of your business.
You need to consider specific facts while you are filing the sales tax of your business. You must not make any mistakes that can cost you dearly later. The sales tax filing process is complicated. You need to consider the facts while you are filing the sales tax returns.
Sales Tax Mistakes You Must Avoid In 2021-
There are several mistakes that you must avoid from your end while you are filing your sales tax. Let’s explore the crucial facts that you must consider from your for making an accurate filing.
1. Not Using The Reseller Certificate While Buying The Wholesale Products:
Many resellers in the US are not aware that they must use the reseller certificate while buying their wholesale products. If you want to avoid some common mistakes, then the reseller certificates will prove to be the best option for you.
If you do not have the reseller certificates with you, then you are just simply making a mess of your business. At the time of the sales tax audit, it can prove to be a significant concern for you to confirm your business’s authenticity in a better manner.
2. Not Properly Vetting The Sales Tax Relationship:
You must have valid documentation that proves that you have the tax exemption policy done and completed under your belt. If you do not have the proper documents at the right time, then at the time of the audit, you will have to face severe consequences from your end.
Ensure that you have made the right choices from your end while you are running the reselling business. Make proper tax exemption with appropriate valid documentation. It can help your business to grow in the right direction. In simple ways, you can evade out the scope of the sales tax burden quickly.
Incorrect tax rates
Avoiding incorrect tax rates in the case of sales taxes is of paramount importance for businesses. Charging the wrong tax rate can lead to severe repercussions, including legal consequences, financial losses, and irreparable damage to the company’s reputation. Customers place trust in businesses to accurately apply sales taxes, and any discrepancies can result in dissatisfied customers or lost sales. Tax authorities meticulously scrutinize businesses for compliance, and inaccuracies may trigger audits and substantial penalties. For instance, ensuring the correct application of sales tax rates, such as the Arizona sales tax rate, is vital for businesses to fulfil their compliance obligations in specific states and maintain a seamless and lawful sales process. By diligently ensuring the correct tax rates are applied based on the buyer’s location, businesses can demonstrate their unwavering commitment to legal and ethical practices, build enduring trust with customers, and avoid potential financial and legal pitfalls. The pursuit of accuracy in sales tax collection not only contributes to smooth operations but also preserves the company’s credibility and fosters a positive and sustainable business environment.
3. Not Collecting The Correct Sales Tax:
If you do not collect the correct sales tax, then you will be in deep trouble. Collection of the proper sales tax can help your business to grow in the right direction. The place of the transaction matters a lot regarding the collection of the sales tax.
You need to collect the taxes from the buyers depending on the transaction and the rates you need to consider for that place. In the case of the E-commerce business, things are a bit more complicated. You must go through the tax laws of the country in a better manner. You must not make wrong choices from your end in this case.
4. Non-Remission Of The Sales Tax When You Have The Nexus In The State:
The Nexus is the connection that the retailer has with the state. If you are in the E-commerce business, then the affiliate nexus or the click-through nexus may charge the amount on you. It can help your business to grow in the right direction.
The click-through nexus will charge all the sales tax transactions. If you want to get your tax clearance report clean, you must pay the tax on time to click-through nexus. In the future, you will get the benefit of the tax deductions too.
5. Not Keeping The Good Records:
You must keep the proper records of the sales tax transactions. It will help your business to grow in the right direction. The auditor will not ask any filthy questions to you if you have the sales tax records in proper order.
The only thing you have to take care of here is to make the right choices from your end regarding the right personnel’s selection for your record keeping. It will help your business to grow properly.
Hence, for clearing your sales tax filing, you must avoid the mentioned mistakes that most taxpayers make when patting the government’s taxes. You need to maintain your records correctly. Your accuracy in the record-keeping can save you at the time of sales tax audit.