Taxes are simply a cost of doing business. Small businesses are subject to paying numerous types of federal, state, and local taxes, along with handling a formidable array of tax forms. And tax laws change constantly. Thus, understanding changing tax laws, including new sales tax laws, can be daunting. Accounting for and paying sales tax has become more complicated over the past few years as online sales have boomed.
Every State Treats Sales Tax Differently
Sales taxes are critical to most states’ revenue sources, providing funds for essential government services and programs. Forty-five states currently levy state-level sales taxes (the exceptions are Alaska, Delaware, Montana, New Hampshire, and Oregon.) Local sales taxes are levied in 38 states. Sales tax rates vary substantially depending on the location of a business.
Each state makes its own regulations regarding what services can be taxed and at what tax rates. The general categories of services that may or may not be taxed are services to tangible property, services to real property, business services, personal services, and amusement and recreation.
Given the complexity of these categories and frequent changes, it can be challenging to keep up with new sales tax laws.
Sales taxes are only one of the types of taxes that businesses are obligated to pay. Other taxes include income tax, employment tax, excise tax, and other state and local taxes. Other taxes can include property taxes, franchise taxes, and business license fees.
How Often Do Tax Laws Change?
It is critical for business owners to be knowledgeable and up-to-date on new sales tax laws and all tax obligations. Missing scheduled tax payments, mistakes in reporting, or mistakes in paying sales taxes can result in penalties or even criminal charges. Tax laws change every year. 2023 reached a 10-year high of changes, reaching a reported 437 tax rate changes. With changes in the U.S. political landscape, more changes may be forthcoming. Given frequent changes, it is hard for anyone but tax professionals to keep up. That is why it is highly valuable to secure the services of small business accounting professionals.
How To Keep Up with New Sales Tax Laws
There are several ways to keep up with new sales tax laws. You can do your own research using a wealth of free online information to find the latest tax rates and regulations. Using your own research, you can set up a system for tracking tax laws and monitoring sales tax rates in all states. Alternatively, and much more appealingly, you can get professional small business accounting and tax help. A professional accountant will know and track each state’s payment requirements and tax rates and will account for all taxes that are due. They will know how and when to remit sales tax payments.
Seek Professional Accounting Assistance
Contact Irongate Financial Partners based in Charleston and serving small businesses in South Carolina. We provide bookkeeping, financial analysis, and outsourced accounting services. Some of our major client categories include construction companies, restaurants, HVAC and home services companies, and medical practitioners. Our aim is to empower growing small businesses with accounting and financial insights and services that otherwise might be out of reach.