Today we have a guest post from our friends at TaxJar. We hope you find the information as helpful as we have.
April is what we here at TaxJar call a “sales tax perfect storm.” Because quarterly and monthly sales tax deadlines converge this month, nearly every online seller will have at least one sales tax filing due in April. And that’s not to mention income tax day on April 15th. Yikes!
Fortunately, sales tax can be simplified and automated until it’s barely a chore at all. Here are my top 7 tips for navigating April’s sales tax perfect storm:
Take your sales tax discounts – About half of the 45 states (plus D.C.) that have a sales tax offer a very small discount to business owners who file on time. I guess they realize that collecting sales tax on their behalf isn’t easy! Don’t leave money on the table. Be sure to take your discount! (And if you AutoFile with TaxJar, rest assured knowing you always keep your sales tax discount.) Here’s a list of states that offer a sales tax discount.- File your sales tax returns – You can file your sales tax returns the old-fashioned way by finding a sales tax form and mailing it in, or login to your state’s taxing authority website and file online. Or you can even let a service like TaxJar take this administrative hassle completely off your plate and AutoFile for you!
- Report how much sales tax you’ve collected (on all your sales channels!) – Now it gets trickier. You need to make sure that you know how much sales tax you’ve collected from customers in each state, on each of your sales channels. You could try to access a report from each channel and then combine it together, or you could use a sales tax automation service like TaxJar. TaxJar integrates with the channels you sell on and creates sales tax reports the way states want to see them. Speaking of the states…
Know your sales tax filing due dates – You can’t file on time if you don’t know when to file. Here’s a list of April 2016 sales tax due dates by state.- Breakdown how much you’ve collected – Wouldn’t it be nice if states just wanted to know one total amount of sales tax you’ve collected from buyers in their borders? Unfortunately, that’s far from the case. The vast majority of states want you to break down how much sales tax you’ve collected by state, county, city and special taxing district, too. You can do this manually (which can take hours upon hours and is rife with mistakes) or let TaxJar do it for you so you can file your returns in minutes!
Remember to file zero returns – It’s very easy to forget that essentially every state wants you to file a return even if you didn’t collect a penny in sales tax over the taxable period. The states consider this your way of checking in to let them know you’re still in business. Some states will even charge you a penalty (Florida’s is $50!) if you don’t file a zero return.- Give yourself a sales tax checkup – Once you’ve finished filing your April sales tax returns, assess your general sales tax health. Are you collecting sales tax on all of the platforms you sell on? If not, you may owe some sales tax out of pocket. (And no one wants that!) Have you hired someone or started storing inventory in a new state? You may have sales tax nexus in a new state and need to file for a sales tax permit there. Giving yourself a quick sales tax checkup now will ensure sales tax filing is even easier when the next “sales tax perfect storm” rolls around – in July!
If you have more questions about filing sales tax, check out our Sales Tax 101 for Amazon FBA Sellers guide or ask away over in the Sales Tax for eCommerce Sellers Facebook group!
Author Mark Faggiano is the founder and CEO of TaxJar, a service built to make sales tax compliance simple for eCommerce sellers. Click this link to get a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!
hi thank you for your great tips. will thank you if you can give tips also for intrnational sellers and tax issue.