Compliance isn’t complicated with the right tools
Ecommerce sales tax is a moving target these days. It’s a tough one to stay on top of, but every business must deal with it. Just to be perfectly clear—collected sales tax is neither a cost to the seller nor does it belong to the seller once it is collected. But it is the seller’s responsibility to collect the required sales tax from their customers and submit to tax agencies when it is due.
For starters, you need to have your shopping cart set up to collect sales tax. At that point, an accounting automation software like Webgility can grab it and record it in QuickBooks. This is helpful because, at any point in time, you can easily view your Sales Tax Liability in QuickBooks. In other words, you know what money you’re holding for different states and you are not spending that isn’t yours.
Why must you know exactly what you’re going to owe and when you’re going to owe it? Because nothing ruins a good night’s sleep faster than collecting the money, not remitting it to the appropriate states, and then waiting for state tax agencies to come knockin’. In other words, you’re required by law to send it to the appropriate agency.
When it comes to which agency you owe, that’s when complications arise. For companies that are have nexus in multiple states (ie, a tax presence due to employees, contractors, or warehouses in that state), the complexities can be significant. Tax automation companies like Avalara and TaxJar can be helpful with this. They do a great job of calculating the very granular tax details and submitting taxes as well.
From a basic best-practices compliance standpoint, Webgility software seamlessly transfers all tax information into the right place in your accounting system. The key is to stay aware of the changes and use a tech stack that allows you to be agile and scale.