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12 Sales Tax Tips for Small Business Owners

12 Sales Tax Tips for Small Business Owners

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Published by avalara
It seems that sales tax compliance has never been more complicated. Our sales tax experts gathered 12 tax tips to help the small business owner survive.
It seems that sales tax compliance has never been more complicated. Our sales tax experts gathered 12 tax tips to help the small business owner survive.

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Published by: avalara on Jul 31, 2012
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09/30/2013

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It seems that sales tax compliance has never been morecomplicated. To help your small business achieve greatersuccess and security, we oer you 12 sales tax tips. Each tipwas selected by an Avalara sales tax expert, and is designedto help you stay on top o the ever-shiting sales tax landscape.
12
SALES TAX TIPS FORSMALL BUSINESSES
Sponsored by Avalara
 
Copyright © 2013
 
Page 2 of 7.
12 Sales Tax Tips for Small Businesses © Avalara 2013
1
NEXUSMANDATORY
E-FILINGPRE-PAYMENT
Determine i you created nexusin any new jurisdiction over the year 
Have you sent an agent or sales representative to anew state? Delivered and installed a product in a newstate on a regular basis? Did you hire new employeesthat work rom a remote location? Answering yes toany o these questions may mean that you will havenexus in a new state.Nexus laws are oten quite complex and eachstate is dierent. Review the laws in each new statewhere you conducted business. I you have indeedestablished nexus, check the state’s sales tax laws sothat you can accurately calculate, le, and remit yoursales tax liability.
Check i you will be required to pay your returns electronically.
Each state decides which payment options it oersto businesses. Some states require businesses withlarger tax liability to make electronic payments. Onthe other hand, some jurisdictions do not have theinrastructure to support electronic payment.Knowing the payment options and requirementsin your states will ensure that you know the correctway to pay.
Find out whether you will be required to make pre-payments in any jurisdiction
Check the prepayment requirements in your jurisdictions. A number o jurisdictions requireprepayment or larger tax amounts. Someprepayments involve a dierent ling schedulethan regular returns, sometimes more thanonce a month. This means that i you nd you are requiredto make prepayments, and you remit sales taxin multiple jurisdictions, you may end up withmultiple ling schedules to manage. Adjust yourcalendar accordingly!
32
 
Page 3 of 7.
12 Sales Tax Tips for Small Businesses © Avalara 2013
SALES TAXPAYABLECHECK CHECKS
Reconcile your sales tax payable account 
Make time to reconcile your sales tax payableaccount with your source documents. Here arethe steps:1. Identiy the balance o your account at thebeginning o the accounting period.2. Add the total amount billed to customers.3. Subtract the total sales and use tax paid,either electronically or by check, beoretimely ling discount.4. Reconcile this amount with the currentbalance o your sales tax payable account.5. Re-class any discount or rounding balancesto the proper general ledger account.
Veriy that all checks you haveissued to the DOR have cleared the bank 
While this may seem unnecessary, a misplacednotice rom the bank or the Department o Revenue might result in an outstanding salestax balance. Be sure to review your process orreceiving and sorting incoming documents,especially i you employ part-time sta. Doyou know what lurks in your stack o papersor ling cabinet?
54
Formula
(Beginning Account Balance)
+
(Sales Tax Bill Total)
(Total Sales and Use Tax Paid)Reconcile this amount withyour current sales tax payableaccount balance.
FILING
FREQUENCIES
Update the ling requencieson your tax calendars
 The beginning o the year is a great time to makesure you know how oten you’ll be required to leyour sales and use tax returns. Jurisdictions typicallysend notices to taxpayers several months in advanceo their ling requency changing, however i youdon’t receive a notice, that does not mean the newling requency doesn’t apply.
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