Own A Small Business? 4 Things You Must Know About Collecting Sales Tax
If you own a small business, you can't afford to take chances or make mistakes with your sales tax. As a business owner, the first thing you need to do is register as a business owner. The registration process provides a way for the government to monitor your business dealings and track your profits. Without the proper tax registration services, you can't legally conduct business. In addition to registering for tax services, you also need to ensure that you follow the guidelines provided below. Following these guidelines will help you avoid tax troubles for your small business.
1. You Must Collect Sales Tax
If you run a small business, you're obligated to collect taxes on any taxable products you sell. It doesn't matter whether you sell fresh produce from the back of your car, or you own a door-to-door dog washing service. If the product or service you sell is taxable, you must collect those taxes. Once you collect those taxes, you must submit them to the appropriate taxing agency.
2. You Must Secure a Permit to Collect Your Sales Tax
If you own a business, but you haven't obtained a sales tax permit, you cannot legally collect taxes from your customers. That situation can create a serious dilemma for you, in that you must legally collect taxes, but you can't do so without the proper permit. To make sure you're not faced with that legal dilemma, obtain a permit to collect sales taxes as soon as possible.
3. You Must Know the Boundary Reach of Your Business
If you are a small business owner, you need to know how far your sales tax responsibilities extend. You may think that you only need to collect taxes from people within your own state, but that's not entirely true. If you have business dealings in other states, and your small business is recognized in those states, you have a legal obligation to collect taxes from customers in those states. You also have a legal obligation to collect taxes from customers on all of your sales platforms, including online customers and cash-paying customers from your participation in local craft fairs and swap meets.
4. You Must Know the Proper Sales Tax Rates for the Products you Sell
If you own a small business, and you don't know the tax rates for the products and services you sell, you're at risk for sale tax issues. Taxing products and services at the wrong rate will result in either an overage or a shortage in your sales taxes. To avoid that risk, always know the proper sales tax rates for the products you sell and the services you provide.
To learn more, contact your local sales tax registration services.