E-commerce sounds like a simple concept. It just requires an online platform and the right audience. Compared to traditional methods of commerce, this doesn’t require the cost of excessive storage, maintenance, and rent. However, businesses that revolve around e-commerce don’t have it too easy. They have to pay sales tax just the same. Tax compliance and filing are confusing concepts. In fact, a large number of people believe that these should be part of basic education and its curriculum.
But don’t worry. E-commerce sales tax isn’t that confusing. Here’s what you need to know about this if you’re a small business.
Keep a Track of Your Money
One of the basic perquisites of efficient sales tax compliance is keeping track of your company’s expenses. This should include every little expense invoice or profit. Once you start tracking your sales and invoices, you can begin to determine the various sources of your sales. Many small business owners are starting new and don’t know the ins and outs of taxes in terms of commerce. This is why such documentation is even more important for them. However, this won’t be a problem with regular tracking and routine documentation. Today, there are several applications that can help business owners to track their money. Here are a few.
- BizXpenseTracker (BXT)
- Expensify
- QuickBooks Online
- Certify
- FreshBooks
Make Sure You Check Affiliate Policies
A large number of small business owners involved in e-commerce use third part organizations to run their businesses. The most common ones are Amazon and Etsy. These are especially important as marketplace facilitators. An additional advantage of such platforms is that they’re also likely to manage most of your remittance and tax sales collection. This can help relieve part of the burden and bulk. However, it’s crucial to understand their policies, terms, and conditions before you dive in.
Even if you’re partnering with well-known and popular third-party marketplaces, you should still be aware of marketplace facilitator laws. This knowledge is very important in understanding tax objectives and compliance. In addition to this, make sure that you are clear on such policies and laws. If you’re not, communicate your qualms and queries. As a business, you need to ensure that you’re on the same page as them. Moreover, ensure periodic auditing of your transactions. This can help you gain a better understanding of your sales and whether they’re being taxed correctly.
Consult a Professional
Tax compliance is puzzling and can confuse even large industry owners. This is why it’s always a good idea to consult a professional. In fact, it’s always better to have a tax expert on your team. Make sure your HR department draws up an adequate talent acquisition strategy to hire the best tax expert for your company. They can help you understand the rules, check with affiliate policies, gather all important documents, and keep a track of deadlines and submission dates.
Apart from this, hiring a professional can also save you effort and time. The number of hours you’d normally spend understanding tax-related laws can be significantly reduced this way. Furthermore, if you don’t wish to hire a candidate you can also consult an accounting service or agency for your concerns.
Stay Updated with Changes
Today’s world is extremely fast-paced. There are constant innovations and changes in the way things work and organizations are expected to behave. This is especially true for businesses. New rules and regulations are regularly being added to new types of businesses. There’s no longer a one-size-fits-all rule for businesses. Tax compliance works differently for most. In this context, it’s important to stay on top of tax-related changes and information.
Moreover, internet sales tax is still new. Thus, its future and nature are not pre-determined. Because of this, small business owners should always be ready for change. You should be flexible enough to adapt to new policies and rules. The best way to do this is to stay informed and updated.
Understand the Rules
In order to comply with tax regulations, it’s important for you to understand the rules and what event had an enormous effect on US workplace safety. This also means that you gain enough knowledge to understand tax compliance in terms of your business. Make sure you’re aware of what rules apply to you, why they apply to you, and how you can comply with them. In addition to this, also pay close attention to sales tax. In order to do this, you will first need to determine if your business is subject to sales tax.
However, this varies with each state. Certain states are known for exempting small businesses. For instance, South Dakota provides exceptions for companies that can prove that they have a certain number of annual sales. This proves that they’re a small business and thus eligible for tax exemption.
The best way for your business to ensure tax compliance is to first analyze the rules and then act accordingly.
