Before the back-to-school sales even begin, it’s time to think about your holiday sales strategy.A plan to stay tax compliant during the busiest shopping season of the year is more important than ever. Including sales tax compliance as part of your overall holiday preparations can support your business’s revenue goals, enhance the customer experience, drive efficiency and cost reduction, and accommodate growth and change. Here are a few steps you can take to stay compliant all year long:
Know where you owe
The first step is knowing where you’re required to collect and remit sales tax. Of course, with the rise in omnichannel sales strategies and marketplace sellers, plus economic nexus laws passed in every state with sales tax, even this step can be tricky.
Plus, if you’re planning to expand your product lines, headcount, or locations to meet increased customer demand during the busy shopping season, your tax obligations might be expanding too. You need a reliable way to stay on top of your nexus obligations as you grow.
Register in each jurisdiction
Once you know where you need to register, the next step is filing all the paperwork; you need to register to collect and remit sales tax in all the places you have nexus. Different jurisdictions require different business licenses and forms, so you might have some hours of research ahead of you if you’re tracking this information manually.
There are more than 13,000 sales and use tax jurisdictions in the United States, and each has different tax rates and product taxability rules. This can make calculating the correct amount of sales tax you need to pay tricky. Make sure you have an efficient way to apply the correct rates to all items you sell for each jurisdiction you sell into.
Exempt sales aren’t exempt from worry
Sales tax holidays, nonprofit businesses, and school teachers buying supplies can all represent tax exemption hurdles, and your business can be fined if you’re missing exemption certificates. Having an efficient solution to collect, track, and validate exemption certificates during the checkout process can save you time and help during audits.
Pay the tax authority
The last step is remitting sales tax to the tax authority. Since every state has a different procedure and deadline for sales tax returns, you need to make sure you understand filing requirements. This can get complicated if you sell to a number of jurisdictions.
If all this seems overwhelming, not to worry. Our partner Avalara has a guide to help you stay tax compliant during a busy holiday season and beyond. Download Holiday readiness Guide: Trends and tips for your retail sales strategy for insights into shopping trends, predictions for the upcoming year, and tips to help make this the happiest holiday sales season yet.