5 Things You Should Know About Sales Tax

Sales tax is basically a consumption tax which is imposed on you by the government for consuming certain goods and services. Businesses or entrepreneurs sometimes hire a professional to help with sales tax filing. We all know that sales tax is not fun or exciting for a business to think about. If everyone is willing and truthful then we all know how much of a huge pain it actually is.

One of the reasons for sales tax to be a huge pain is the changing rules and regulations of it from state to state and business to business. Sales tax can get complicated but there are some general rules which can help you conquer this burdensome administrative chore.

5 Things taxpayers should know about Sales Tax:

Below mentioned are five crucial things which every individual and taxpayers should know about. Sometimes the taxpayers are not aware of them which makes the tax filing process complicated for them. They are –

Governed at state or local level

Sales tax is not governed at federal or national level, but at the state and local level in the United States of America (US). Though the rules and regulations of the sales tax depend on the guideline of the Department of Revenue or tax agency of the states. Sales tax is not the same in each and every state of the US. These sales tax is like revenue for the state and local governments.

Collect sales tax in states where there is nexus

There are states in the US who have sales tax nexus, these are the states where you need to collect sales tax by selling your products. You cannot collect sales tax in states which has no nexus, as the law doesn’t allow you to do that.

Taxable and non-taxable items

Every taxpayer should keep this in mind that not all the items they have purchased or sold are taxable. The guidelines of the Department of Revenue (DOR) shows them which items are taxable and which are not. Though these taxable and non-taxable products also differ from state to state.

Sales tax rate varies from state to state

The sales tax rate depends on the DOR of the state where you and your business are. If you are doing business in more than one state but your headquarters are in one state then you can charge the sales tax rate of the state in which you are selling your products in. Every state in the United States have different sales tax rate, so it varies from state to state.

Complexity of filing varies from state to state

There are some states where the sales tax filing is really simple for the taxpayer to file, while there are other states where the process is a bit more complex. Although this again depends on the guidelines of the Department of Revenue (DOR) or the tax agency of that state.

So, these are the five main things which all the taxpayers should know about when they are doing their sales tax filing or anything related to the sales tax. These things can help with the sales tax issues you might be facing as well. You can also consult with any of your business based consulting firm or any consulting person to get more information about your business related things for sales tax.