Tax Tip Tuesday – Sales Tax

If you are not filing sales tax for your small business, do you know why? Most states have a filter in place that matches filing a Schedule C and a state sales tax account. If the two don’t match you will get a letter.Some categories of work have both taxable and non-taxable servces, such as a cleaning service. 

In case of a letter audit I gather my proof  ahead of time. I start on the state’s website and print my reference. Then I always follow up with a phone call to the state sales tax department and record the date, time and person who gave me the advice. Almost every time, I have misinterpreted the simplified version that is on their website. 

Unless the state claims you are exempt from filing, you may still not owe tax, but may need to file a zero amount sales tax return. This matches the non-taxable transactions that occur with your Schedule C tax form amounts. It is uncommon to not pay sales tax, so do a little research if you haven’t been paying sales tax.