Monday, July 14, 2008

Have you paid your Sales Tax yet?

Yep, it's that time of year again, the end of the fiscal year and the beginning of a new one, the time when all businesses, large and small, write a big-fat check to their State's Board of Equalization for all the sales tax they've collected on the States behalf.

Since my local tax board seems to understand that start-up micro presses won't have very many sales in their first year, which means there will be very little tax to actually collect, they sent me the Short Form: BOE 401-EZ. Happily this form was easy to fill out and the entire process took about an hour to complete. The form even had my local sales tax printed on it so I didn't have to hunt for that number to do the math. 7.75% x taxable amount = tax owed.

The only tricky part was figuring out exactly what the taxable amount was. Not every sale is taxable. Some of my sales went to bookstores who have their own resale license and collect their own sales tax. A few more were via the website to other States. I did some research and discovered that you only pay sales tax to the State where you have an actual, physical office or distribution center. That could change though because as States are struggling with budget deficits, they are eyeing internet commerce as a source for new tax revenue. is battling New York State right now over that issue. But for now, interstate sales through my website are not taxable (but don't take my word as gospel. Double check for yourself and let me know if I'm wrong).

Sales tax must be paid by July 31st or you can get hit hard with penalties and late fees. Don't fool around with your taxes: pay them! You can even pay electronically with a credit card. I know people who got behind and lost their business because they never paid sales tax, and another person who is still paying tax from 2006. If you're having trouble, talk to your local office of the State Board of Equalization.

The links I've posted here are for the State of California. Be sure to find the appropriate websites for your own State if your business is not in California because every State creates their own Sales tax rules, and some States, like Oregon, don't collect Sales tax at all.

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