What is business without bureaucracy and regulations? What a question! We live in a world, were things have to be normed, controlled and arranged. This is also the case of having a business of every kind.
In every business one of the most important topics we should be aware of is sales tax. Businesses achieve sales via selling and delivering products or offering various services. Depending on the value of the product or service and the state you’re in, you may have to pay different taxes. By registering your company as a legal business, you will be asked to pay sales taxes, which vary as mentioned before with their percentage in each country and on each service or product.
Tax payments and related processes can be easy if you make a proper yearly record of your receipts and expenses of your business. When you are having your own business registered in the country you work from, it is necessary to have a clear accounting with high quality principles where every detail is noted to give you all safety and transparency for a good business. This work is not the main aspect of your work but gives you the required fundament for all legal tax related subjects. It is the proof for your tax collector to proceed the sales tax papers.
If your business cannot be located in a single state, you need to know about the term “Nexus”. Sales Tax Nexus describes the situation of the connection of your business to a tax jurisdiction like the state.
Nowadays, with the growth of global online businesses this expression gets very important.
Sales tax nexus occurs when your business has some connections to a state. If you’re having an office/warehouse or employee or doing any kind of physical business, then it creates Nexus between the state and your business. If this happens in a state, then you must collect the sales tax from your customers to give it to the state in the asked amount.
Some entrepreneurs who are running businesses online might try to circumvent the sales tax because they deny having a nexus to a state. Consult a professional if your business has to collect sales tax or not. If you make any sell via amazon as a drop-shipper then you might serve numerous states or countries. That means that you are confronted with different regulations for sales taxes because of a nexus to various taxing jurisdiction. Inform yourself about the legal framework to run a successful online business and not get involved in legal difficulties just because you didn’t know the rules.
Note that you should be careful to not collect sales tax in a state in which it is not registered to do so. Overcharging sales tax is an illegal activity because it is a misuse on multi layers and leads to civil penalties.
So, getting ready from day 1 is the best idea for running a successful business. This will not only help you during the tax process but also for aiming the number of sales per month in the future.
If you’re planning a big business serving many international customers, hire a staff who can help you track the number of sales and taxes by making a detailed accountancy. It absolutely makes sense to have an accounts department with professional accounting clerks who make reports and accounts about the whole business. To run a successful business, you should follow all the rules and regulations which are prescribed from the state.
If this is your first time, I highly recommend you to visit a legal firm who can introduce and guide you with your business about accounting and taxation. Not paying sales taxes can lead you and your business in a disquieting situation. Taxes are different from business to business and state to state, so visiting one of the professionals will definitely put you on the right and safe side.
We hope this general information helped you to get a basic idea about sales tax and sales tax nexus. If you are in the process of getting your sales tax, consult with professionals to get the most benefit for your business.