Sales Tax Compliance and Solutions

By Jonathan Porter, CPA

Sales tax is a hot topic right now due to the recently passed law of a 1% local sales tax raise in many Des Moines area communities. This change has not only affected consumers, but has changed the compliance requirements for many local business owners. Today, Jonathan Porter discusses theses compliance changes and how they could be simplified with the use of technology.

Jonathan Porter, CPA | Senior Manager
JPorter@MHCScpa.com

see vlog transcription below:

Hey, I am Jonathan Porter and I am a CAS Senior Manager at McGowen Hurst Clark Smith. In this video, I am going to talk about sales tax Compliance and Solutions.

Sales tax is a very hot topic in Des Moines right now. As of July 1st, the recently passed law of 1% local tax is in effect for many communities in the Des Moines area, and this changed the compliance requirements for many local businesses. A lot of states require businesses to report the county and city additional sales tax amounts along with the state, and this added information can be cumbersome if your system cannot process it. During the rest of the video, I will give some suggestions that make this local sales tax compliance issue easier.

If you haven’t seen any of my other videos, I highly encourage businesses investing into an accounting system. One of the many reasons is when you invoice out of an accounting system, majority of the time, the sales tax will be calculated and be aggregated with the other sales for the month. The key is to make sure the sales tax area is set up, so the reports will be showing the correct information to file. Some systems will require you to create each state, county, and local sales tax item and then bundle them together to get the correct allocation of taxable sales. QuickBooks Online has a new feature, Automated Sales Tax Center, which will calculate sales tax based off your location and the location of the goods or services provided to the client. This automation can make compliance for sales tax a lot easier if you take the time to get the system correctly set up.

Most accounting systems will only gather the information you will need to file the reports, so it’s important to set up online access to each state you are required to file in and complete the needed reports timely.

Another option is to use a third-party software to handle the whole sale tax compliance process. Most of these applications will connect into your business systems or solutions and complete the sales tax requirements on your invoice. This is very popular with online retailers, because their sales tax requirements can vary, so most of the applications will do the heavy lifting on the front end for compliance purposes. Another added benefit is these applications can also file your reports and remit your tax. Basically, once you implement one of these applications, you should not have to worry about figuring out how much sales tax to charge a customer or filing the reports at month end.

Overall, sales tax has become more complicated with the Wayfair decision. Here in Des Moines, there are additional complications with the new local sales tax options going into effect. As a business owner, it is important to utilize your systems or add an application to make your compliance requirements easier. Throughout the whole process, please do not hesitate to reach out to MHCS if you have any questions over the solutions.

Be sure to check out our YouTube Channel for other valuable topics to view, learn and share. If you have questions, please give us a call, drop us an email, or stop by – we are always happy to help. Thanks!