Bookkeeping mistakes can be costly.
One of the most common mistakes bookkeepers make is forgetting to collect and report sales tax.
It's important to have a system in place to ensure that sales tax is accurately collected and reported.
Here's how to do it:
1. Get a sales tax permit: Before you start collecting sales tax, you'll need to get a permit from the jurisdiction in which you're doing business.
Depending on the government, you will need to obtain this permit from the Department of Revenue or the Department of Taxation.
2. Know the applicable sales tax rate: Most of the time, the sales tax rate is based on where the goods or services are being sold.
Make sure to research the applicable sales tax rate for each jurisdiction you're doing business in.
3. Collect and remit the sales tax: Once you know the applicable sales tax rate, you need to collect it from your customers and remit it to the appropriate state agency.
Most governments require sales taxes to be collected and remitted on a monthly or quarterly basis.
4. Accurately report the sales tax: In addition to collecting and remitting sales taxes, you must also accurately report them.
Most governments require businesses to report the total amount of sales tax collected for the reporting period, as well as the amount of sales tax that was remitted to the state.
By following these steps, bookkeepers can make sure sales taxes are accurately collected and reported, helping to avoid costly penalties and fines.