Unless you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, sales tax is a part of life and business. Sometimes, it can also be problematic for businesses who are responsible for collecting and remitting these taxes to state taxing authorities. The followings are some things to take into consideration in terms of collecting and filing sales tax:

• Make sure there are proper internal controls in place for sales and use taxes.
• Proper record keeping.
• Compliance with state rules and regulations on what is taxable, nontaxable, and exempt.
• Determine if there is a liability for taxes due to other states where there may be business activity.

Businesses who do not adhere to state record keeping and filing requirements run the risk of being penalized by the tax agencies. The rules can vary from state to state but one thing that is standard throughout is the necessity of timely filing of these taxes. Many states require the sales tax filings be done electronically, which give the tax agencies better control on tracking who is in compliance with the filings so they can easily flag what businesses should be assessed a tax, penalties and interest or in most cases who is a good candidate for an audit.

However, this can easily be avoided. Sales tax can easily be tracked by using a POS system, cash registers or other bookkeeping programs such as QuickBooks. Running/posting sales through a system (if set up properly) will automatically track the tax being collected, making the filings easier to process and less likely to be filed late. If you are a business owner and having trouble setting up your processes, contact your CPA or accountant for assistance.

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