Sales Tax Audits: Why You Need to be Prepared

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Tax in general is a word that triggers fear in most business owners, but sales tax is an even more treacherous world, when you’re the one responsible for it. There are lots of intricacies and nuances to think about and, if you’re new to entrepreneurship, it can be very daunting to get thrown into this at the deep end.

While certain aspects may be a little complicated, there’s no reason why everyone can’t get their heads around sales tax and their business’ obligations to the IRS. As long as you play by the rules, there’s no reason why you should have any issues if your company was faced with a sales tax audit.

Sales tax compliance is something you need to get in-tune with, from the moment you think about launching your business. Getting this wrong can have drastic consequences, which can easily be avoided if you take some simple step to cover.

1. Invest in a Good Accountant

Accounting and bookkeeping is the foundation of any successful business, and it goes without saying that you should really ensure that you have a reliable accountant on-hand when it comes to all tax-related affairs. They will be able to advise you on the best way to manage the finances of your business and stay on the right side of the IRS.

2. Sales Tax Software

Sales tax regulations are a lot easier to overcome if most of it is automated and stored on a cloud-based system. The triggers for audits are much less likely to occur this way, and it makes the whole process a whole lot easier to manage. This goes for day-to-day bookkeeping, as well as long-term record-keeping, and ensuring that you can pull out specific details as and when they are required.

3. Plan Ahead

When you run a small business, it’s often the case that you manage a lot of different aspects of the business, which (if you had a larger operation) you would hand over the responsibility to others. This being the case, you need to make sure that you properly make plans in your schedule to deal with all tax matters.

4. Timing is Everything

Like with anything where there are timing limitations, it is absolutely essential that you give yourself enough time to complete your sales tax filings. Often enough, it will take a lot longer than you expect, so it’s up to you to nudge your accountant to get things prepared as soon as possible. The same obviously goes for your sales tax audits (if you ever happen to have one), as any delays will make the process significantly more difficult to manage.

Appeals are an Option

Don’t worry if the IRS finds a discrepancy with your business’ sales tax filings; it doesn’t necessarily mean that a big tax bill is coming your way. Always bear in mind that you will have the option to appeal any decisions, and have them reviewed again. This is another reason why your timing is so vital, as it means that you have more time to overcome any errors or hiccups before it’s too late.