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I’m a big believer that entrepreneurs should at least know the basics of every aspect of their business. But as your business grows, your time is spent on more important tasks than handling administrative hassles like filing sales tax returns.
This post will help business owners determine when it’s time to automate their sales tax life.
Depending on your business structure, reporting and filing sales tax returns can be complex and time-consuming. Here are five signs that it’s time to automate.
Your time is money. And calculating how much sales tax you collected in each state, city, county, and other special taxing district is a time-consuming hassle. To add insult to injury, sales tax is a “pass-through tax,” meaning that you collect sales tax from your customers and remit it to the state. It isn’t a profitable activity!
If you’re spending more than half an hour on sales tax, your time can be better served automating your sales tax reporting and filing. As your business grows, you’ll want to consider totally automating sales tax so that you never have to touch a sales tax filing again.
We talk to online sellers every day who are late filing sales tax returns. Unlike income tax, which is due once per year, sales tax is due multiple times per year. To make matters worse, each state has different sales tax due dates. For example, sales tax in Georgia is due on the 20th of the month while sales tax in California is due on the last day of the month.
Unfortunately, nearly every state levies a monetary fine and an interest penalty when you’re late filing sales tax. If you’re a busy entrepreneur having trouble keeping up with your sales tax due dates, it’s time to automate so you never miss a sales tax filing due date again.
Sales tax filings are tricky. They often require a lot of math and rounding. In many cases, once you fill out an entire sales tax filing form and hit “submit,” the state’s system will come back to you saying there’s an error. Then you’re required to go back over the lines and lines of sales tax data you just submitted to find the problem.
If you find yourself making errors (whether they are your fault or the picky state filing system’s fault!) it may be time to automate sales tax.
About half the states with a sales tax will let you keep a small portion of the sales tax collected when you pay on time. This amount is generally only 1%-2% of the sales tax you collected, but it’s free money!
Of course, you need to remember to take your discount. If you keep forgetting and leave this money on the table, it may be time to automate your sales tax life!
Sometimes as a busy entrepreneur, you simply don’t want to deal with a thankless task anymore. Nobody can blame you! If you’re simply sick of logging into outdated state sales tax filing systems and manipulating spreadsheets to figure out how to file sales tax, you should automate sales tax so you can spend your valuable time doing what you do best—running your business.
Recognize yourself in this post? Then sales tax automation might be for you. If you want more information about sales tax for product sellers, check out TaxJar’s “Sales Tax 101 for eCommerce Sellers Guide.”
TaxJar is a service that makes sales tax reporting and filing simple for more than 8,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!