Sales Tax Fundamentals
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7 Common Sales Tax Filing Mistakes To Avoid
byDecember 30, 2021
Last updated December 23, 2021
Whether your e-commerce business files taxes monthly or quarterly, it’s easy to get tripped up remitting money to a state. To help you understand and avoid some of the pitfalls we’ve learned from talking to e-commerce businesses, we’ve outlined some of the most common mistakes companies make when filing sales tax returns. Read on to learn how you can avoid these common mistakes when it’s time to file and pay sales tax.
Top 7 Sales Tax Filing Mistakes
1.) Filing Late – We get it. Filing sales tax is painful, but what’s more painful is putting it off. You still have to file (eventually) and you’ll be hit with penalties and late fees.
2.) Not Filing a Return at All – What’s the least that can happen if you fail to file a return? Even if you don’t owe any sales tax, you may be on the hook for a penalty (Florida’s is $50!) or get your sales tax permit revoked. Worst case scenario, you’re on the hook for criminal charges! (Don’t panic! All states are different, but this usually occurs either when you’ve either a.) avoided ever filing for a sales tax permit and collecting and get caught b.) collect sales tax from your buyers without a sales tax permit.)
3.) Incorrectly Reporting Tax Collected – In an ideal world, sales tax reporting is easy. You tally up everything you’ve collected from a state and send that money in. But here in the real world, states have other ideas. Most want you to break down how much sales tax you’ve collected based on county, city or other special taxing district. And if you sell on multiple channels, combining your sales tax reports can be a nightmare. That’s why we created TaxJar. It integrates all the platforms you sell on and creates return-ready reports for every state. No more worrying that you’re filing the wrong amount of sales tax. Connect with our team of experts today to learn more about how it works.
4.) Tripping Up on Taxable Periods – If you have sales tax nexus in multiple states, you’ve probably run into this: some states want you to file annually, some want you to file quarterly, and others want you to file monthly. It can be very easy to confuse the dates of a taxable period and file the incorrect amount of sales tax. Especially since many states’ definitions of a “taxable period” are a little bit different. Be sure you’re only filing the amount of sales tax you collected from customers during the right taxable period. TaxJar takes care of that for you, too.
5.) Forgetting to Include Necessary Information – Wouldn’t it be nice if ever state’s sales tax filing form was well… uniform? Sadly, that’s not the case. Sales tax filings can be rejected just for leaving off easy-to-forget information – like your signature. Fortunately, filing online makes this harder to do, and letting TaxJar AutoFile your sales tax returns makes filing foolproof! Find out more about AutoFile here.
6.) Computation Errors – Math defeats even the best of us, and sales tax forms don’t make it simple. Take California, for instance. California sales tax filings require that you round amounts up and down until it feels almost impossible to make your numbers match what they want to see. Be wary of computation errors! Or hey, just use AutoFile.
7.) Spending Too Much Time on Sales Tax Filing – While sales tax filing is a necessary part of your business, it’s most definitely not a moneymaker. That’s why it’s so important to try and simplify your sales tax so you can get back to the business activities that will pad your bottom line. We created TaxJar to take the pain out of reporting and filing sales tax. Connect with our sales team today to learn more, so you don’t make this sales tax mistake!
Ready to get started with TaxJar? Learn more here!