ALL >> Business >> View Article
Sales Tax Guide For Business Owners: Part 1
![Profile Picture](https://www.123articleonline.com/images/avatar-default.jpg)
My middle child learned a tough lesson over the weekend. The Slurpee at the local 7-11 is priced at 99 cents. He had a dollar and thought he could afford this fine delicacy. After the register rang up $1.07, a bit of shock came through, sales tax became a reality. (Fortunately, dad had a few coins, so a meltdown was averted).
In this article, we will create building blocks around sales tax (as well as ‘use’ tax). Our objective is to make a technical, esoteric (and boring) subject relatable and help inform our business owners about this subject that can have long-reaching effects.
First off, sales tax is a consumption tax. Like the opening example, a tax happens once a purchase is made and is a function of purchase price (i.e., a % of the selling price). By contrast, income tax is based on your wages (earnings/compensation). The sales tax is a key source of revenue by state and local treasuries to fund various budget line items, like roads and schools.
The simplicity of sales tax ends here. While income taxes are no picnic, sales tax has many detailed layers of tax code as both state and local (county/city/municipals) ...
... establish their own rules and standards… including Washington, D.C.!
As well, each state defines and treats each ‘good’ or ‘service’ very differently. In one state, the same service is non-taxable, but when you cross a river to the next state, that service is now taxable. Certain goods – like selling the American flag – qualify for tax exemption. Some states – like Oregon, Montana, New Hampshire, and Delaware – do not have a state sales tax.
Technology and new laws have made sales tax more complex as more transactions occur electronically. Commerce is more frequently occurring virtually and sparks new challenges for businesses to understand and comply with sales tax code in states other than their headquarters. Operationally, applying sales tax in a homogenous manner can be an undertaking for your systems and finance teams. Compounding the administration of the billing and remittance, is that the tax laws are continuously changing.
In our next article, we will discuss the foundation concept of nexus.
I am Aaron Jaeger, leader of Credo’s CFO practice, CredoCFO. My approach is to work as an extension of your executive team to help you meet distinct goals and create—as we say at Credo—Results That Matter.
Whether you are in hyper-growth mode, launching a new product, or considering your exit strategy, CredoCFO offers fully customized financial strategies to achieve your objective.
Let us get to know you and your business. Please click here to schedule a call at a time that works for you.
Add Comment
Business Articles
1. Lawnmower Engines: Some Of The Basics In Understanding How They Work And How To Maintain Them In Chatham-kentAuthor: Denny Hawk
2. Keep Your Chainsaw Running Smoothly: Chatham-kent’s Leading Chainsaw Parts Repair Service
Author: Denny Hawk
3. Enhance Your Brand Visibility With Expert Signage Solutions In Auckland
Author: Tinting Experts
4. Driveworks Support - Design And Automation Services
Author: Design Automations
5. Professional Driveworks Training Course - Design Automation
Author: Design Automations
6. Driveworks Implementation Services - Design And Automation
Author: Design Automations
7. Why Kitchener Businesses Need Mobile Optimization For Seo Wins
Author: Vishal Sharma
8. Local Seo For London Businesses
Author: Mandreel
9. Navigating The Competitive Seo Landscape In London
Author: Mandreel
10. Miami Seo Company Solutions Designed To Grow Your Business
Author: Mandreel
11. The Power Of Miami Seo: How To Dominate Your Local Market
Author: Mandreel
12. Local Seo Strategies For Small Businesses In Toronto
Author: Mandreel
13. The Rise Of Tech Startups And The Role Of An Seo Agency In Toronto
Author: Mandreel
14. Emerging Trends In Ppc Advertising
Author: Mandreel
15. Ppc Management Strategies For Small Businesses In The Uk
Author: Mandreel