If your business specializes in selling goods/services, you must look into the critical sales tax return process. This process involves some crucial steps in which you’ll calculate the right sales tax rate, collect that tax from customers, remit it to the relevant authorities, and maintain records of paying your taxes. However, your business must file sales tax returns in different jurisdictions in case your business operates in multiple states.

Here are some reasons you must accurately file your tax returns:

• Regulatory Compliance: Stay up to date about the changing sales tax rates and regulations to ensure that you’re collecting & remitting the correct amounts.
• Avoiding Penalties: As eCommerce businesses are under strict scrutiny, discrepancies in tax collection can trigger an audit that’ll end up uncovering larger issues.
• Maintaining Trust: Sales tax collection errors will dissatisfy customers and damage your business’ reputation, leading to a sharp decline in credibility with consumers.
• Streamlined Operations: Reduce the time spent on manual calculations so you can focus on business growth, lowering your business’ administrative burden significantly.

Tools like TaxCloud play a significant role in simplifying the sales tax filing process for businesses. Instead of doing your calculations manually, you can rely on TaxCloud to do your sales tax return calculating/filing for you.

Here are 4 ways TaxCloud helps you file sales tax returns:

• Automates the calculation of sales tax based on real-time data taken from more than 13,000 jurisdictions across America
• Integrates easily with Shopify, BigCommerce, and eCommerce systems to streamline sales tax return processes in the US
• Ensures compliance with evolving taxation regulations by updating tax rates, especially if your business operates in many states
• Streamlines the reporting/filing process, saving your hours each month that would be spent otherwise on manual calculations and paperwork

Interested in learning how to file sales tax return? This article will help you stay on top of your taxation obligations.

The Complex Sales Tax Return Process

The process of sales tax return filing is complicated as you have to be detail-oriented and keep up with the latest changes in the tax code. However, this detailed guide will outline the steps involved in this process. Read this guide carefully and follow all 5 steps to efficiently file your tax returns and stay on top of your obligations to the state financially:

Step 1: Gather Your Sales Tax Data

The first step involves gathering sales tax data. This is the data that you need to file tax returns. To accurately file these returns, you must collect the necessary documents by gathering this data:

• Total Sales: It’s the amount you’ve earned from your sales during the reporting period.
• Sales Tax Collected: It’s how much tax you’ve collected from customers on taxable sales.
• Exempt Sales: Any sales that are exempt from sales tax (including resale transactions and certain services) will be included here.
• Returns & Allowances: Any returns or allowances that affect the total sales amount will be included here.
• Location-Based Sales Data: If your business operates in multiple jurisdictions, you should collect data specific to each location’s sales and tax rates.

How TaxCloud Can Help?

If you want to automate sales tax data collection, TaxCloud can help you in this regard. This desktop app will integrate with major eCommerce platforms seamlessly. So, your business tracks sales and taxes collected in the reported period in real-time. With automation, you can reduce all manual entry errors by making sure that your vital data is available for filing right away.

Step 2: Understand Tax Filing Deadlines

The second step involves understanding your sales tax filing deadline. Every state has its deadlines when it comes to sales tax return filing. These dates vary based on your sales volume. Missing a deadline can lead to hefty penalties and interest charges. You get to submit your tax returns by the 20th of every month in most states, for example. Similarly, others may have quarterly or annual filing schedules based on sales thresholds.

Step 3: Calculate Sales Tax Liability

Then, you must evaluate if your business even stands eligible for sales tax. This process can look like this:

• Determine Total Taxable Sales: You will calculate the total amount of taxable sales made during the reporting period.
• Apply Appropriate Tax Rates: Then, you must calculate the correct sales tax rates for each jurisdiction where sales occurred.
• Calculate Total Sales Tax: After that, you’ll have to multiply the total taxable sales by the applicable tax rates to determine the total sales tax liability.

How TaxCloud Simplifies Calculation?

TaxCloud calculates your sales tax automatically across multiple jurisdictions. It’s a great way to apply the correct tax rates based on real-time data. TaxCloud eliminates manual tax calculations. These calculations work for different locations and help avoid costly errors.

Step 4: Submit Sales Tax Return

Now, we come to the part where you’ll actually file your tax returns. It goes like this:

• Complete Required Forms: First, you will access the appropriate forms from your state’s revenue department website.
• Enter Sales Data: The form will be filled with relevant data, including total sales, tax collected, exemptions, and any adjustments.
• Submit Electronically (or by Mail): You can file tax returns electronically or send them via mail to your local revenue department depending on state regulations.

How TaxCloud Assist with Filing?

TaxCloud streamlines the filing process by submitting returns on your behalf for multiple states. This feature saves time and reduces the risk of errors that often arise when you are submitting your returns manually.

Step 5: Make the Tax Payment

After filing your returns, you’ll have to make payment for any taxes owed. This is the final stage of the tax-return-filing process and it goes something like this:

• Determine Payment Amount: You have to make sure that the payment amount matches your calculated liability.
• Choose Payment Method: Payments are usually made via electronic funds transfer (EFT), credit card, or check, depending on state requirements.
• Keep Records: You will have to keep records of payments made for future reference and compliance checks.

8 Requirements for Filing a Sales Tax Return

Filing your tax return requires gathering different documents and tools for careful reporting. You’ll have to follow this detailed checklist of necessary items that your business must prepare when the time comes to file your tax returns. If there is still any confusion, look into the filing requirements laid down by the official websites to ensure compliance with the latest tax laws.

1. Business Information

• State-issued sales tax ID
• Business name and address
• Employer Identification Number (EIN)

2. Sales Records

• Collect all sales invoices issued during the reporting period
• Gather reports from your POS system that summarize total sales and sales tax collected
• Keep copies of receipts for all transactions, especially for cash sales where invoices weren’t issued

3. Exemptions and Deductions

• Collect any exemption certificates received from customers who are exempt from paying sales tax
• If you purchase items for resale, make sure that you have resale certificates on file for those transactions

4. Financial Records

• Prepare profit & loss statements that reflect the total revenue generated during the reporting period
• Gather reports detailing any expenses that may affect your taxable income

5. Tax Calculation Tools

• Have access to the latest sales tax rate tables to ensure accurate calculations
• Use accounting software that integrates with your sales systems to automate calculations and reporting

6. Filing Documentation

• Download or access the appropriate sales tax return forms required by your state or local jurisdiction
• Keep copies of previous years’ returns for reference, especially if there are changes in reporting requirements or rates

7. Payment Information

• Have your bank routing and account numbers ready for electronic payments of any taxes owed
• Evaluate records of any previous payments made to ensure accuracy in reporting current liabilities

8. Compliance Tools

• Consider using software like TaxCloud to automate calculations, filing, and compliance updates across multiple jurisdictions

Final Thoughts

In short, the process of filing sales tax returns can be automated with TaxCloud. You can simplify this process by generating return-ready reports. It’ll save time and ensure that your business meets all due dates as well as regulatory requirements. Moreover, you can avoid the penalties associated with non-compliance by filing your returns early.

With TaxCloud, you can manage your sales tax processes within your existing system with ease as this platform integrates seamlessly with eCommerce sites, such as Odoo, Shopify, BigCommerce, etc. Dedicated customer support makes it an ideal sales tax compliance management software.

Ready to simplify your sales tax filing process? Start your 30-day free trial with TaxCloud today! Sign up now to take advantage of this opportunity!