Getting your business tax compliant may seem complicated, but it doesn’t have to be with the right sales tax solutions. Staying on top of changing tax laws is crucial for any business owner. The last thing you need is an audit resulting in fees, interest, and penalties that could have easily been avoided. According to the U.S. Government Accountability Office, Congress provided the IRS in 2022 with about $80 billion over a 10-year period to help modernize taxpayer services and enforce tax laws. Here are some steps you can take now to ensure your company remains compliant.
Register Your Business Properly
The first key step is making sure your business entity is properly registered. Are you a sole proprietorship, partnership, corporation, or LLC? Be sure to check federal, state, and local requirements for business licenses and tax IDs. For example, if selling products online, you likely need a sales tax ID number. Consulting an accountant can help guide you in setting up your business correctly right from the start. Tools like sales tax solutions even automate registration across states and counties for you.
Collect and Remit Sales Tax
If your business sells taxable goods or services, charging accurate sales tax rates is crucial. Rates vary widely depending on the state, county, and city your customer is located in. Calculating these rates manually is next to impossible. Using sales tax solutions to automate tax calculations helps prevent compliance issues down the road. Accurate tax collection also keeps your financial reporting tidy in case of an audit.
Stay Up to Date on Tax Laws
Tax laws seem to change every time you blink. Ensure you have a system in place to stay current on requirements. Sign up for retailer newsletters from state departments of revenue or work with an accountant familiar with the latest tax codes. Again, robust sales tax solutions self-update as laws change across jurisdictions. Relying on outdated resources puts you at risk of failing to meet revised guidelines. Protect yourself by making tax reform monitoring a priority.
Staying tax compliant may involve some work upfront, but catching issues early and leveraging technology like sales tax solutions saves ample time and money in the long run. With a few preventative measures in place, you can operate with confidence knowing you meet requirements, thus avoiding penalties.