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Business Sales Tax- Bookkeeping Rules

Maintaining Adequate Records (Hint: What we do!)

Keeping good records of your business operation will help you prepare accurate and complete sales tax returns. Your returns must show gross sales, taxable sales, purchases subject to sales or use tax, sales and use taxes due for the specific locality in which the items or services were delivered to your customers, other special taxes due, and other information. Without a detailed, organized set of books, completing your sales tax return will be merely impossible.

 Sales Records (Services or Products you make money on)

You must keep records of every sale, the amount paid, charged or due on the transaction and the sales tax due, if any, using the applicable sales tax rate.  It is important to note that there are several different sales tax rates according to your specific jurisdiction in New York State so it is important to be careful that you are charging your customer the correct rate. For example; Westchester County sales tax is 7.375% however, the city of New Rochelle (which is in Westchester) is 8.375%.

Purchase Records (Stuff you buy in order to make money)

You must keep detailed records of the nature, type, value, and amount of all business purchases. You must be able to determine any sales and use tax due on the basis of these records. I have a client that is a plumber, who pays sales tax on job materials that he purchases.  Since he is paying the sales tax to the vendor, he is eligible for the Materials Use Credit on his sales tax return.  This will reduce his total amount of sales tax due by the amount that he already paid on materials for that particular period.

If you fail to keep adequate records (This should never happen ;)

  • You could be held liable for substantial additional sales and use taxes plus penalties and interest. The penalties include:A penalty of up to $1,000 for the first quarter or part of a quarter, if you fail to make or maintain records or make them available to the Tax Department; the penalty increases up to $5,000 for each subsequent quarter or part of a quarter that failure occurs.

Final Remarks (We can help you!)

Completing Sales Tax returns for our clients on a monthly, quarterly or annual basis depending on your business filing status is an area where we have great expertise.  So leave your worries, troubles and anxiety to CBAuthentix Business Services Inc. to let you focus on what you do best which is running your business and maximizing profits.

Shoot me an e-mail to find out how we can get started!

Chris Boyer, EA

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