Once you enter the world of business you realize that it’s not as funny as it appeared to be. Most of the new kids on the block easily get devastated and usually give up after the first try: however, not everyone is that fragile! Some of them find the courage to continue, and very often contact tax professionals like us who provide prestige tax services!
Today we will mainly focus our readers’ opinions on one of the most common types of taxes – sales tax. This tiny element of the entire tax system plays a pivotal role for everyone…Well, at least for the local government! In other words, If you want to know how sales tax works and the way it can affect your business, read this blog and feel the power of knowledge!
What is Sales Tax?
You can refer to sales tax as a consumption tax, which is established by the government. Long story short, this is the percentage of sales that buyers are paying for taxable products. Most often, everything that you can see, feel, touch, or smell is taxed!
If you are running your own eCommerce business in the United States, you should be educated enough on the tax matter, as it can make or break your business! So, let’s go through the basics and understand which rules you should follow!
Rule 1 – Sales Tax Rate is NOT The Same!
As a person who is operating an online business, you should understand one thing – sales tax is governed at the state level. This means that states are not only different in names, but they are also apples and oranges when it comes to taxes!
To better understand what we are talking about, let’s take two different states and do a mini case study!
One of the biggest states, California is leading the pack when it comes to sales tax rates. California offers its citizens one of the highest sales tax rates at 7.25 percent! The base rate is 6% which comes together with the mandatory local rate of 1.25%.
At the same time, one of the lowest state and local sales taxes is in Hawaii where people enjoy their purchases, because the sales tax rate is 4.44 percent!
Rule 2 – Fines Will Be Your Good Friend
Sales tax is actually quite innocent if you know how to handle it. However, it’s not that easy! Most often people sit there and stare at all the paperwork they have: as we said, most of them simply quit because of lack of education and experience.
Moreover, states and their regulations are so different that not everyone manages to catch up with changes and amendments. This is the reason even the most experienced business owners sometimes confuse the filing dates and file their sales tax late…
Moreover, sometimes your business needs to acquire a resale certificate that is directly connected to sales tax. If you don’t have one, you will face heavy state fines and the anger of the IRS!
Rule 3 – Whatever You Do, Double-Check With Professionals!
Seriously! First of all, you can use the IRS to understand taxes and make them work. The Internal Revenue Service won’t disappoint you: it offers various resources and tools to simplify the process of filing and handling taxes, you just have to do some research!
Secondly, you can always contact us for help! Don’t be afraid to ask us your tax-related questions: we understand that they are more complicated than they should be! Together with our services, you will perfectly see the growth of your business, and what is more, you will see how easily you circumvent all those tax issues you were once worried about.