When starting a business, there are a few important points you need to know about Sales Tax. This week I’ve had the discussion several times and decided it would be beneficial to share the information with the VBO audience. Each state has it’s own regulations. If you’re not ready to outsource these services, it’s important for you to contact your state department for your state’s specifics. Here’s a brief summary:
1. Once you file for your sales tax certificate, you are responsible for filing sales tax REGARDLESS of sales. Even if you have zero sales, you must file a zero sales tax return.
2. Each state has different filing periods. For example, New York annual sales tax ends 2/28/xx. Connecticut annual sales tax ends 6/30/xx.
3. Each state has different sales tax rates. For example, New York sales tax rates are broken down by county. Massachusetts has one fixed rate state wide.
4. Each state has different filing requirements in “how to” file. New York mandates sales tax filings are completed electronically on their website otherwise you face a $50 fee for “paper filing”. It is my belief that all states will turn to this eventually if they haven’t already. If it’s not currently required in your home state, keep your ears open.
5. Each state has a different definition of “Nexus”. According to TaxJar.com, sales tax nexus “occurs when your business has some kind of connection to a state. All states have a slightly different definition of nexus, but most of the time states consider a “physical presence” creates nexus.” For more detailed information, check out the TaxJar.com link below or consult your home state’s website.
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