Sales & Use Tax
Sales & Use Tax
Sales and Use Tax is a critical area of compliance for businesses selling goods or services. Sales tax is typically collected from customers at the point of sale, while use tax is applied when goods are purchased without paying sales tax (e.g., from out-of-state vendors).
01
Sales Tax Collection
Businesses are required to collect sales tax from customers on taxable goods and services. The rates vary by state, and sometimes by local jurisdictions, making compliance complex.
02
Use Tax Responsibilities
Use tax is paid by businesses when sales tax isn’t collected at the time of purchase, such as when buying equipment from an out-of-state supplier. It ensures the correct tax is paid on taxable items.
03
Compliance with State Laws
Each state has its own laws and thresholds for when sales tax must be collected, including varying rates and regulations for online sales, making it essential for businesses to stay up to date.
04
Nexus Requirements
Businesses must collect sales tax in states where they have a “nexus” (a significant connection), which could be a physical presence, employee, or sufficient sales volume.
05
Filing and Reporting
Businesses are required to file sales and use tax returns regularly, usually on a monthly or quarterly basis, depending on the state and volume of sales.
06
Penalties for Non-Compliance
Failure to properly collect or remit sales and use tax can result in audits, penalties, and interest charges. Accurate record-keeping is essential to ensure compliance.
