Sales Taxes 101: A Guide For Your Small Business

Sales Taxes 101: A Guide For Your Small Business

If you’re about to start running your own business, then you need to be aware of the sales taxes. It might not sound easy at all, but this is a task that you don’t need to do by yourself. Tax accountants are the type of professionals that you’ll need to hire to comply with the financial laws and avoid fines or audits.

So, before start selling any product or service, you need to be totally aware of your tax responsibilities. And that’s one of the main reasons why your small business needs a bookkeeper, but anyways we will go through a quick guide of sales taxes for small businesses.

Any business that sells products needs to collect sales taxes from customers. That also applies to some kind of services (because not all services are taxable). So, the process would look like this: you calculate the sales taxes rates, you collect the payment, then submit the sales tax return and pay the tax. It sounds simple but let me tell you that it won’t be an easy task if this is your first time running a business.

Therefore, we will go through each step and explain it thoroughly to you. 

1. Is Your Product Or Service Subject To Sales Tax?:

First of all, this will be the first thing that you’ll need to be aware of. Hence, you’ll need to do your homework and research this topic.

One quick tip: Do not fall on the misconception that online sales don’t pay sales taxes. 

Even if you’re going for the online shop option you need to comply with the financial law. The key to success would be to do research or seek advice from experts in the field. An accountant for sure will know if your product or services are subject to sales taxes. 

For instance, commonly food doesn’t pay sales taxes, so don’t think that every product does pay them. And, in case that you don’t know, some digital products, like streaming services, have to comply with the sales taxes too. Hence, the easiest way to solve this would be to hire a professional that will solve any of your doubts without hesitation. 

2. Get The Required Permits:

In order to collect the sales taxes that your business requires for any product or service, you’ll need a permit or registration. That will depend on the country where you are selling your products. Also, the tax regulations can vary from state to state, and you might need registration in all the states where you’re vending your products. Normally, this permit or registration can be done for free, so don’t worry about paying fees for this.

In some countries, you only need to fill a form to get a federal tax ID. All of these procedures are simple, and you’ll be getting your registration, permit, or federal tax ID in no time. So, there’s no excuse for not doing this important step that will allow you to comply with the tax regulations. 

3. Calculate The Sales Tax Rate:

That is something that might sound a little complicated, but now that financial management systems gave changed and improved, you can calculate the sales tax rate easily. An accountant can also help you to do these calculations because the rates can change depending on the state where you are selling your product. If you do international sales, then things can be a little bit trickier, but don’t let that discourage you. There are a lot of people that have expertise in the field and can help you with this matter.

Make sure to charge the proper amount to your customers to cover the tax. If you don’t do so, then you’ll be losing money because you’ll have to cover that amount and pay it to the government anyways. So, this is a step where you need to be precise. You can check out our comprehensive article on how sales tax is calculated

4. Send Your Invoices:

Now, don’t forget to do your declarations each month to avoid further inconvenience with the law. You must keep a record of everything that you sell; that way, you can avoid problems if the government does an audit of your business. Don’t try to do the invoice by yourself if you run a small business because you can do mistakes that can cost you money later. Hire an accountant or a bookkeeper that can take care of all your financial matters. 

A tax agent is also useful for small business tax return tips that will make you get the most out of them. So, don’t try to go in the tax return season by yourself, do it by the hand of an accountant.

Why Do I Need To Hire An Accountant For My Business?

As said earlier, hiring a financial professional to work with you is a must. They can guide you through all the steps you need to do for sales taxes, tax returns, and any matter that has to do with taxes and complying with financial law. Accountants will also help you to improve your business. They will do a record of all the money coming and going, and you’ll be able to do a monthly budget of your company expenses. As well, that will be an easy way to identify where you’re losing money, and you'll be able to do changes that will allow your business to grow.

So, if you’re planning to expand your business or to have healthy finances, you need to work with an accountant. It will make your life easier, save you time, and give you advice in financial matters that will positively impact your company. 


Now, you know more about sales taxes, and you know what to do to comply with them. It sounds a little trickier than it actually does, but if you do your research and work with a bookkeeper or accountant, you won’t have any problem calculating them properly. It’s a crucial matter for any business, so don’t try to evade the law and avoid paying these taxes. If you want your business to be a reliable and professional one, then you need to comply with the law.
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