Sales taxes are mostly levied by the states on the ultimate purchaser of goods or non-exempt services. Nevertheless, some municipalities still impose their own sales tax on top of any state sales tax. In most cases, governments use sales tax in paying for budget items such as street sweeping or fire stations.
If at all you deal with products or services that are subject to sales tax, then you ought to calculate how much sales tax to charge on each transaction. In addition, you must also collect the sales tax from buyers after which you should pass it on to your state’s taxing authority by filing sales tax return. That aside, here are some of the things you need to know about calculating sales tax.
Do You Need to Charge Sales Tax?
A number of entrepreneurs do not seem to know whether they are required to charge sales tax. If you are in this category, then there is no need to panic. Well, whether you need to charge sales tax depends on a couple of things. To give you a tip of the iceberg, you will first have to determine if what you’re selling is taxable.
In most countries, the majority of ‘tangible’ property is taxable. This includes items that you can touch or feel such as coffee cups, furniture or even books. However, some states exempt necessities like clothing and groceries. It is highly advisable that you check with your state’s taxing authority to determine whether the products you sell are taxable.
Calculating Sales Tax
When it comes to calculating sales tax, it would be better to check your local sales tax rate and charge that to all customers. This is mostly the case when you sell from one location, such as a storefront. The good news is you can find your sales tax rate using a sales tax calculator or by getting in touch with your state taxing authority.
Things tend to be quite hard for those running online stores since a number of factors come into play when figuring out the amount of sales to charge. For instance, sales tax generally depends on the ship-to location of the item. You will therefore have to figure out if you’re required to collect sales tax rate from customers in your buyer’s state not forgetting sales tax rate at the buyer’s location.
The Bottom Line
Calculating sales tax is not that hard as some business owners make it sound. This is mostly the case when using a sales tax calculator to determine the right sales tax amount to charge your buyers. If you are searching for such a sales tax calculator, simply check out Taxfyle.com. Thanks to Taxfyle, you will spend less time worrying about taxes as it takes care of all the details. To find out more regarding what Taxfyle can do for you when calculating sales tax, simply pay a visit to their official website at any time of the day.