Authored by Mark Faggiano, Founder and CEO of TaxJar
July is what we here at TaxJar call a “sales tax perfect storm.” Nearly every online seller has a sales tax due date this month – and many sellers have sales tax filings due in more than one state. These five quick tips will help you successfully navigate the perilous waters of July:
Double Check Your Filing Frequency
Your sales tax due dates generally occur either monthly, quarterly or annually. But sometimes, usually in January or July, your state may change your filing frequency. Be sure to carefully read any communications you receive from states where you file sales tax, and be sure you are filing and remitting at the correct frequency.
Know Your Sales Tax Due Dates
Every state is slightly different when it comes to what date of the month they want you to file. The majority set the sales tax filing due date as “the 20th day of the month after the taxable period,” but others want to hear from you on the 15th, the 25th or the last day of the month. Check this list of sales tax due dates to determine when your filings are due in each state.
File Zero Returns
One of the most common sales tax mistakes we run across is sellers who forget to file a “zero return” when they haven’t collected any sales tax. States want you to file a return on the due date, even if you don’t owe them a cent. In fact, failing to file can result in anything from a $50 fine to revocation of your sales tax permit. Ouch!
Don’t Discount Discounts
About half of the states with a sales tax realize that collecting sales tax poses a burden on sellers. For this, they allow you to keep a very small portion (usually 1-3%) of the sales tax you collected from your buyers. Check out this list of states that offers sales tax discounts and don’t leave money on the table!
Give Yourself a Sales Tax Checkup
The next sales tax perfect storm arrives in October, just as Q4 really starts to heat up. To avoid wasting time on sales tax when you could be making record profits, double check your sales tax compliance now.
If you are an FBA seller, follow these steps to determine where you have sales tax nexus. If you have nexus in new states, read our “When to Register for a Sales Tax Permit” guide to decide if it’s time to register. Then make sure your Amazon Seller Central sales tax settings are set up to collect sales tax from buyers in those states. (On the other hand, if you no longer have nexus in a state and don’t believe you will in the near future, cancel your sales tax permit and stop collecting sales tax from buyers in that state.)
You can also look into sales tax automation. Sales tax automation takes complicated sales tax reporting and filing off your hands so you can focus on the profitable parts of your business!
TaxJar is a service that makes sales tax reporting and filing simple for over 5,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!