Most businesses don\u2019t start out big.\u00a0 Some of America\u2019s most beloved companies\u2014from Apple to Amazon \u2014 started out with an entrepreneur, a dream and a garage.\u00a0 But business is about more than dreams.\u00a0 At some point, every home-based business (also called \u201cmicro businesses\u201d) needs to understand government regulations, like those surrounding sales tax.<\/p>\n
Why?\u00a0 Well, whether your microbusiness has big dreams of growth or you just want to work for yourself, keeping in compliance with sales tax regulations is critical to continued success.\u00a0 Sales tax audits can put a huge dent into profits, and states are hiring more auditors than ever to ensure that every business, big and small, is paying its fair share.<\/p>\n
Some owners of home-based businesses think they don\u2019t have to worry about sales tax until they\u2019re one of the \u201cbig guys.\u201d\u00a0 In fact, nothing could be further from the truth.\u00a0 Many states require all<\/em> sellers located in their state who sell goods or services regularly to register for a tax ID number and file sales tax returns, regardless of the specific dollar amount of sales the business makes.<\/p>\n But most microbusinesses don\u2019t have full-time accounting staff.\u00a0 So how can you ensure that your small business is in compliance?<\/p>\n Registering for sales tax is the first step toward meeting your sales tax obligation\u2014but today, more than ever, even knowing where to register can be tricky.\u00a0 A decade ago, most microbusinesses only had \u201cnexus\u201d (a close enough connection to a state to trigger sales tax collection obligations) in their home state.\u00a0 Today, even home businesses use drop shipping and warehousing services, like Amazon FBA, to make sales.\u00a0 These services can trigger sales tax registration and payment obligations on sales to end users in several states.<\/p>\n Figuring out where to register can be tough, but actually calculating and filing sales taxes using tax tables can be even tougher.\u00a0 Different jurisdictions have not only different rates, but may exempt different goods and services from taxation.\u00a0 As your business grows, compliance gets even more complex: there are over 12,000 sales tax jurisdictions in the United States, and hundreds of changes to sales tax rules and rates every year.<\/p>\n Compliance doesn\u2019t have to be this difficult.\u00a0 Avalara\u2019s white paper, Three Steps to Choosing a Sales Tax Solution for Microbusinesses<\/a>, can help you take your first steps toward guaranteed accurate sales tax calculation and filing.\u00a0 Don\u2019t wait for an auditor to change the way you think about sales tax \u2014 take charge of your microbusiness and find a solution that works for you now.<\/p>\n