Sales tax compliance can always change. It is not something that can be set in stone. The rules and regulations are changing all the time and so is your business. To be constantly up to date on your tax compliance, a business should regularly discuss and review its needs. Below are a few steps that will help you ensure you are tax compliant once you have reached your economic threshold.
Review the Economic Nexus LawsYou need to stay updated on the Economic Nexus Laws. A business should be able to fully understand them because for each state with an economic nexus law, there are separate transaction and sales thresholds. First you need to understand the effectiveness of these laws, and only then can you implement changes in your business to support them.
Evaluate Sales DataA business needs to constantly evaluate their sales data and monitor and analyze it effectively. One needs to review this data and compare it to the laws in place.
Determine the Next Steps for your Business: Registration and LicensingAll businesses need to know that the economic nexus laws are simply the latest version of sales tax nexus laws. If you established nexus previously but have not been registered to collect tax, you might have to take extra steps to manage the tax jurisdiction. Some of these steps include backfiling unpaid taxes and participating in a voluntary disclosure agreement. If you’ve reached a threshold, which is why you have a tax obligation, your business will have to collect and remit in the new tax jurisdiction. The first step is to sign up for a sales tax license, while keeping in mind that each tax jurisdiction comes with its registration process, forms, and requirements.
Adjust Your SettingsCompanies have to make sure they can collect and remit in all new jurisdictions. This is why they have to make adjustments to their cloud system so that it can calculate, file, and remit everything on the behalf of your business in the additional jurisdictions.
- Your business needs to be updated with all the new sales tax regulations
- These regulations vary based on jurisdiction. Each state can have different laws in place
- The steps to ensure your company is tax compliant is to first review all new nexus laws, evaluate all sales data, get all registrations and licensing in place and get a software to adjust all the new settings