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Sales Tax CPA discusses Compliance and Sales Tax Variables

Sales tax CPA discusses compliance

Gary Bode, CPA: usually we train your staff for sales tax chores and then offer support if and when needed. For a free phone consult, please call (920) 399-2705.

I’m a business CPA, so I see sales tax issues in multiple States, usually as part of the business start-up cycle.


Pay in full and on time. Every sales tax CPA sees companies get into trouble with these taxes. Penalties and interest mount up fast. The vendor collects these taxes from the customer and holds them in trust until depositing them with the State. So, criminal charges can be a consequence of non-compliance. Sad but true.

Don’t Double Pay

Generally, you’ll purchase your inventory without incurring sales tax. You collect and pay sales tax only on your sales. I’ve been engaged to recoup double taxation back from States.  Not fun.

Sorting Out Sales Tax Confusion; a Sales Tax CPA Tip

If you read your State’s sales tax regulations, they probably seem confusing. But your own specific compliance requirements, once determined, usually stay the same. Compliance eventually becomes another routine chore or series of chores. So here’s what I do as a Sales Tax CPA when facing a new situation. I get an understanding of your business and then call the Department of Revenue to help me determine the compliance requirements. Then I double-check that info with the Regulations.

Ongoing Compliance Tips

  • Schedule the sales tax tasks. Perhaps with the first bill paying cycle after the sales tax collection period ends. Don’t count on automatically remembering to do it, especially in the first few months in business.
  • Have a system in place to deal with the processes of calculating sales tax, preparing the form, paying it and keeping good documentation. For example, where do you pull the sales figures that form the basis of sales tax calculations? If you’re a retail merchant, for example, this might mean  producing the same POS report every month.
  • Use a spreadsheet to calculate the required sales tax figures. Unless the State has a web fill in form that does that for you. A good spreadsheet usually allows you to enter one figure, which then calculates all the sub totals. My spreadsheet shows data for a year at a time, unless the requirements change. Centralized data makes follow-up issues easier.
  • Keep consistent hard copies in chronological order. Every sales tax CPA has had to go back and reconstruct sales tax obligations for clients. Consistent, chronological documentation helps prevent problems and makes fixing any issues easier.
  • I suggest writing the entire process down and making it part of the operations manual. This helps allow other staff to pitch hit when the bookkeeper is off.

Complicating Issues

Generally, your Sales Tax CPA would setup your books to proactively accommodate sales tax calculations.

  • Multiple tiered sales tax e.g. local, County and State sub components.
  • Selling in multiple tax geographies. Even within a single State, there can be different County and local sales tax rates. This requires sub-categorizing sales by geographical region.
  • Selling items subject to different sales tax rates. This requires filtering sales by sales tax rate.
  • Providing goods and services. Generally, services don’t incur sales taxes.

I’m a national business CPA with a virtual office for long distant clients. My philosophy is to make your business as self-reliant as you want it. So, I’m generally involved in training your staff on how to handle ongoing sales tax obligations, and then offer support when needed. But we can handle the job for you as well, usually through one of our bookkeepers. For a free initial phone consult, please call (910) 399-2705.

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