Most business owners never worry about sales tax after they first open their business. At that time, they set up their procedures and then believed that as long as they paid their sales taxes monthly, there was nothing left to worry about. In this video I discuss why this can be a big mistake.
The myth most business owners believe: Most business owners never worry about sales tax after they first open their business. At that time, they set up their procedures and then believed that as long as they paid their sales taxes monthly, there was nothing left to worry about.
Why this myth causes a problem: In a word—audit! My clients have been audited at a higher rate than any other time in the last 20 years. And based on my discussion with other CPAs, this is happening citywide.
The truth successful business owners learn the hard way! Sales tax audits are a bigger threat to your business's survival than almost anything else. The sales tax audit from my last three client audits resulted in an average bill of over $100,000. (Of course, after appeal, we expect to pay much less.)
Lesson learned: As a business owner, it is your responsibility to do a threat assessment annually. You should learn the sales tax laws that apply to your business and do self-audits to determine your potential exposure.