Forums: Discussions for entrepreneurs and small business.

Ok,

Couple questions.

1) Sales Tax is only for products correct, not services?

2) Sales Tax online is only applicable to states you have an office or located at. If you have suppliers based out of another state that you use however your actual offices are based out of a different state, would both states require online sales tax?

3) Is quickbooks a good way to keep track of sales tax for different states? If so, would you just create different profiles, when sales come in from a certain state, you keep those sales in that state profile?

Thanks for your help.

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What is subject to sales tax depends upon the state and can include project and services.  For example, NY does not tax food but taxes certain services.

At the moment - on-line sales tax is based on where the business is located meaning you only need to collect sales tax for in state shipments.  However, some states are trying to get around that.  NY considers 'associates' of Amazon to create a location in NY and now Amazon has to collect sales tax on shipments to NY.  This is going to get messy because it is a burden for a small business to keep up with sales tax changes, collection and remits for multiple states.

QB allows you to denote which products are taxable and in which state in your customers are taxable.  The issue comes back to my first comment above, that rate is subject to sales tax is not the same in every state.  But from my experience, that is an issue with most systems.

I would recommend only collecting sales tax in state AND if you start to get flack from another state either start collecting OR stop shipping to that state.

1) Sales tax is generally only products and not services, however, each state's laws vary and you should read the information from your state closely. Also, shipping & handling may or may not be taxable.

2) You must collect and remit sales tax in states in which you have a nexus -- a physical presence or an employee. Neither a supplier nor a customer creates a nexus, however, a warehouse that you rent or an independent sales rep will.

3) All the major accounting systems have methods for keeping track of sales tax, so if one of the others meets your needs better, you can choose it.

Best regards,

Molly Donaldson

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