A sales tax deadline can easily become a dreaded obligation if you aren’t prepared. In my opinion, quarterly and annual sales tax deadlines are even worse than a monthly deadline, because it makes it difficult to establish a sales tax filing routine.
But no matter if you are required to file sales tax monthly, quarterly, annually or a combination of all three, these tips will help you save time, money and headache when it comes to sales tax!
1. Collect the Right Amount of Sales Tax
Sales tax filing becomes more difficult when you didn’t collect the right amount of sales tax from your customers in the first place. So make sure you have your sales tax collection settings correct right from the start! Here are some step-by-step guides to setting up sales tax collection on the major shopping carts.
We even have a video to walk you through setting up your sales tax collection settings on Amazon:
2. Double Check Your Due Date
Sales tax is generally due 20-30 days after the filing period ends, but that varies widely from state to state. For example, Maine sales tax returns are due the 15th of the month after the filing period ends, but California’s are due the last day of the month. Many other states’ sales tax returns are due on the 20th, though some are due on the 23rd or 25th. Still other states have variable due dates depending on how much sales tax you are remitting. Double check your state’s sales tax filing due dates so you don’t miss a deadline and find yourself paying a penalty and interest!
3. Start Your Sales Tax Filing at the Right Time
Like we said above, sales tax is generally due 20-30 days after the filing period ends. Some sellers are go-getters who want to start filing the day after the sales tax period ends and be done with it. Others put filing sales tax off until the last minute. We recommend starting somewhere in the middle. If you sell on an online marketplace like Amazon, give your transactions a few days to settle before you begin your sales tax filing, so you can make sure you’re seeing all of your sales tax collected. But don’t leave it too late! Give yourself plenty of time to file in case an unforeseen problem comes up and you need to contact a CPA or the department of revenue. The closer to sales tax filing time, the harder it is to get help!
4. Automate Your Sales Tax Reporting
Most states don’t make it easy to fill out your sales tax returns. It would be simple if they wanted one number – how much sales tax you collected from buyers in the state. But the vast majority of states want you to break down how much sales tax you collected from customers in each county, city and other special taxing district. This is why filling out sales tax returns can take some sellers hours on end.
And if you sell on multiple channels, forget it. You find yourself pulling multiple sales tax reports and then trying to smash them all together in a spreadsheet. No fun!
A sales tax automation solution will connect with the shopping carts and marketplaces on which you sell and slice and dice all of your sales tax transactions for you. No more fighting with spreadsheets and state tax tables, or figuring out which local taxing district applies to each of your customers.
Sales tax automation solutions like TaxJar give you a return-ready sales tax report so you can finish your filing in minutes, not hours!
5. Don’t Forget to File “Zero Returns”
Most states want you to file a sales tax return if you are registered with that state, even if you don’t have a cent of sales tax to report. States consider this a “check in” to let them know that your business is still open and you’re still complying with their sales tax laws. In fact, some states will assess a penalty for failing to file a sales tax return. And nobody wants to pay a penalty to a state when you didn’t owe any sales tax in the first place! Be sure to file a “zero return” in any states where you are registered but didn’t collect any sales tax to avoid penalties and headaches later.
I hope this post has helped you save time on your next sales tax filing. For much more about sales tax, check out our Sales Tax 101 for Amazon FBA Sellers guide.
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