Taxes and sales figures are a mind-boggling game played by the small and middle-sized business owners at the sales tax audit. Although the situation is not any different for a large organization as they also have to take sales tax consulting for their audits. Sales tax is the tax paid on the sale or lease of goods or services. There is no national sales tax in the United States, which means no standard rate is applied uniformly in all the states. The percentage from 2.9 to 7.25 percent at the state level.
Sales tax depends on three main factors
- Nexus-The first factor to consider here is which states you are liable to pay taxes. There are many points to be seen here for the connection between you and the state. It is the essential marking point to determine whether you are liable to pay tax or not. It is necessary to register in every state where you are responsible for paying tax. The connection between you and the state is determined if you have a warehouse in that state.
- The products or services you provide-Different taxes apply to different products, so you are taxed accordingly. The layers of tax applicable to a specific address, state, and country are also differently charged.
- If you are exempted from tax-, Some states provide an exemption to certain products or services like resold items, raw materials, and if you sold items to a non-profit organization.
All this seems confusing for a businessman as there are chances of going wrong in calculation or not knowing the rules regarding exemption. To make the process easy and understand it in simple language, it is always better to consult a firm. They will guide and help in many more tax filing activities, computation, and tax account compliance in different states.
Why hire a sales tax consulting firm?
All the business houses recognize that filling wrong returns can be a wastage of time and risky. The other reasons to hire sales tax consulting firm is
- The firm conducts full knowledge of tax and analysis of your sales transaction.
- Every business is different and has a unique nature; it sets a unique solution for every business transaction.
- Ensuring that your business is following tax laws is essential to avoid fines and violations.
The services are provided by sales tax consulting to various trade houses. They provide services at different levels for each other’s kind of business.
Sales tax consulting services provided to retail firms
Growth in digital marketing has changed the retail sector’s face. Which eventually has led to changes in the supply chain and the competition level in the market. The constant need to grow and perform better has led the retailer to look for professionals to guide them. A consulting firm for sales tax provides many services in conducting the retailer.
- To guide taxation- national or international, transfer pricing, restructuring, VAT, and Customs duties.
- To give consultation on matters on capital allowances, currency volatility, and tax mitigation.
- To provide ideas for business planning and support trying to access funding.
- To advise on disposals and seeking acquisitions during phases of M&A.
- To guide on both governance issues to attract investment best and on minimizing fraud and corruption risk.
- To teach ways of compliance on tax and audit and financial reporting.
Consulting services for service-based business
The service industry is generally not taxed by most of the states. To know and understand the law regarding the service industry’s taxation in a few specific regions, these firms are beneficial. The function of these firms are-
- To guide about the basic policies of the states where they are not exempted from tax.
- To guide about the breakdown of the sales tax chargeable of these services.
- These guidelines are challenging to understand to interpret them simply and guide the client regarding the same.
Consulting services to the E-Commerce industry
With the boom in the online industry, people are somewhat confused about the correct amount and guidelines regarding the e-commerce sales tax. It is essential to understand a bit of this tax. The small amount added by an online retailer on the sale made by him while online trading. It is a consumption tax which means, the consumer only pays it on taxable items they buy at retail.
Sales tax is governed at the state level. There is no one law for all the states of the United States. It puts an online trader in a tricky position as they deal with sales tax in the different U.S. states.
The rules for online sellers when collecting sales tax-.
- Your business has a sales tax connection in the same state as your customer.
- The product is taxable in that state.
Services provided by sales tax consulting firm for e-commerce business are-
- To guide the client regarding the computation of the sales tax.
- The guidelines given in the sales nexus are challenging to understand by a layman to help develop an understanding of sales nexus.
- To help attain sales tax permits and aid in filing tax accordingly.
- To help you be compliant with the paperwork needed by the different states involved in the transactions.
- To ease the process of tax filing and not becoming a defaulter.
- To help attain Resale certificates, which are required to be used to buy items that you genuinely plan to resell.
- To double-check your sales tax compliance periodically.
In the end
To avoid unnecessary confusion and pay double tax or avoid joining the defaulter’s list, it is advisable to consult a tax consulting firm. It helps you to review your sales processes to identify any discrepancies in between. It allows you to avoid costly mistakes over time. The staff gains experience and confidence with the help of a professional. All these collectively help you to concentrate on your work in a more effective manner. So, pay the tax on time with the correct guidance and avoid mistakes.