Dealing with Sales Tax in the US
If you are doing business anywhere in the United States, then you are liable for paying local sales taxes. And for that, it doesn’t matter if your business is located within the US or outside it. If your end consumers live in any of the US territories, then you have to pay sales tax.
US Sales Tax Doesn’t Come Under Federal Domain
Unlike VAT that has the same rates all across the European Union, US sales taxes are subjected to state and local laws. For that matter, it is really important that you are working with an experienced tax preparation firm because every local jurisdiction has its own tax rules.
Moreover, it is not easy to work amid hundreds of tax jurisdictions while complying with all of them. If you are not taking care of your bookkeeping and accounting on a professional basis, then you might find it really difficult to deal with sales taxes.
The Determination of the Sales Tax Nexus
To put in simple words, the nexus of a business tells its tax liability in a particular location. For instance, if you have your sales operations (nexus) in Dallas, then you are under obligation to file and pay Texas sales tax.
Factors that Decide the Value of Sales Tax
Your Business Location
This one is a no-brainier; you have to pay the sales tax of the state where your business is physically located.
Your Offered Products and Services
Every state sets different tax slabs on different commodities. For instance, a business dealing in digital services is not taxed as a venture offering physical services. In a similar manner, digital subscriptions, digital item, physical commodities— everything is taxed at a different tariff.
Again, you need to work with tax preparation experts that are aware of the sales tax rate on different commodities in a particular state.
Your Method of Selling
Some states also devise different sales taxes for different modes of businesses. For instance, a brick-and-mortar store might have to pay different sales tax than a venture that is operating virtually or from a home office.
Your Sales Volume
In order to protect small businesses from getting crushed under overwhelming tax compliances, many states offer a threshold to define that tax nexus. For instance, a business with not more than, say, $50,000 worth of sales per fiscal year is not classified as a nexus venture and thus can get around the sales taxes.
If you are running a small business and want to take care of its bookkeeping, accounting, and tax preparation, then get in touch with My Counts Solution; this online tax preparation firm offers its expertise at very reasonable rates.