When a business first starts up there are a variety of tax and compliance issues that must be addressed to make sure the IRS is satisfied. Sometimes the issue of sales tax is confusing to some new business owners. Here are some of the more common sales tax mistakes to watch out for as a new business.
It sounds hard to believe but some new businesses ignore sales taxes all together. You might think you don’t need to charge tax on your sales or the service or products you provide, but if you’re not absolutely sure, you’re maneuvering in risky territory. The first thing you need to do is make sure that you understand where your business needs to collect sales taxes. Businesses that don’t collect and remit taxes when they should are putting themselves at risk for additional fees as well as heightened audit risk. If you’re not sure, it is always a better idea to consult with a tax professional.
You must make sure that the figures you report are correct. With thousands of sales tax jurisdictions across the U.S., keeping track of the right amount to charge and remit can be a huge challenge. It is even more difficult today because of online shopping which can scatter your sales tax data across multiple platforms. Again, it is highly recommended that tax professional be consulted for the correct information.
Due dates are a big deal to the IRS. Figuring out the rules and procedures for each state can be just as challenging as determining how much and where to charge. When do you need to file? How often do you need to file? Have requirements changed? All these obligations are mandatory, not optional, and if things fall through the cracks, you might end up paying late fees or non-filing penalties.
These tax issues can be complex and difficult to understand so if you aren’t sure you should talk to a tax professional.