Sales tax compliance has never been more complicated. To help your contracting business achieve greater success and security, the tax experts at Avalara have compiled 12 sales tax tips for contractors. Each tip was selected by an Avalara sales tax expert, and is designed to help your contracting business stay on top of the ever-shifting sales tax landscape, better manage 1099s, handle exemption certificates quickly and efficiently, and free up your time for revenue-producing activities.
Determine if you created nexus in any new jurisdiction over the year. Have you sent an agent or sales representative to a new state? Delivered and installed a product in a new state on a regular basis? Did you hire new employees that work from a remote location? Answering yes to any of these questions may mean you will have nexus in a new state. Nexus laws are often quite complex and each state is different. Review the laws in each new state where you conducted business. If you have indeed established nexus, check the state’s sales tax laws so you can accurately calculate, file and remit your sales tax liability.
Check if you will be required to pay your returns electronically. Each state decides which payment options it offers to businesses. Some states require businesses with larger tax liability to make electronic payments. On the other hand, some jurisdictions do not have the infrastructure to support electronic payment. Knowing the payment options and requirements in your states will ensure you know the correct way to pay.Find out whether you will be required to make pre-payments in any jurisdiction. Check the prepayment requirements in your jurisdictions. A number of jurisdictions require prepayment for larger tax amounts. Some prepayments involve a different filing schedule than regular returns, sometimes more than once a month. If you find you are required to make prepayments, and you remit sales tax in multiple jurisdictions, you may end up with multiple filing schedules to manage. Adjust your calendar accordingly!
