Tax compliance is an essential aspect of any business, with sales and use tax making up a large portion of overall tax requirements. However, sales and use tax can get complicated very quickly aseachstate and local tax has its own rules and nuances.
With increased connectivity and remote capabilities, it has become easier than ever for a business to conduct interstate commerce. When a business’ operations expand across state lines, this opens the company to potential tax filing requirements in other cities and states.
Why is sales and use tax compliance important
There is a heavy administrative burden to sales and use tax compliance. Consider every type of transaction to ensure you use the proper tax categories when calculating sales and use tax liabilities. In addition, you must meet deadlines when filing forms and paying taxes. Your company can be subject to additional filings, penalties, and interest on any underpaid amounts that could total an extra 40% paid on the tax liability.
The costs associated with noncompliance can eat intoyour profits and affectyour ability to pay additional obligations. All of the filings and tax calculations can get even more convoluted if yourcompany has a presence, or nexus, inanotherstate or locality. These days, a nexus is even easier to achieve than in the past.
How to determine if you owe taxes in another state
You may find your business has tax responsibilities in other states without even realizing it. Businesses that have a nexus because of a presence in the state or local region are subject to certain sales and use taxes for that region. This can be established through a remote worker or affiliates living in the state or region, or because of a physical or economic presence in the state.
Keeping track of where your workers live and whoyour business partners are is important to determine tax liabilities.
Solutions for managing sales and use tax compliance
Keeping abreast of the changing sales and use tax landscape can be time-consuming. While it may seem like hiring an individual internally to manage this process is a better plan, outsourcing the process to a knowledgeable tax professional can be cost-effective.
When you work with LongSchaeferyou take advantage of several benefits;
- We are already monitoring changes in the tax code that may affect
- We manage deadlines for tax forms.
- We use our wealth of existing knowledge to help your organization, including establishing best practices.
- We can reduce money spent on an in-house tax expert and lower risks related to compliance of sales and use tax laws.
Reach out today if your company would like to chat with our knowledgeable tax professionals to help your organization, whether through an audit of existing processes or by outsourcing your tax handling altogether.