Understanding Sales Tax Accounting in Atlanta
The Department of Revenue is, in essence, your silent business partner. They hold a share in your business worth the sales tax rate. Their contribution to your business is the ability to do business in their state. For this reason, you are collecting sales tax on their behalf, which is normally 40% of the state’s revenue in a given year.
How Is Sales Tax Accounting Different from Income Tax Accounting?
- Not all sales are taxable, whereas all income is taxable.
- Your business location alone will not trigger a sales tax liability.
- You are holding money in escrow for the government, not paying a part of the money as a tax after it has been earned.
These are just a few basic differences in sales tax obligations versus income tax obligations.
Factors to Consider When Hiring a Sales Tax Accounting Firm
Key Considerations:
- Nexus
- Selling services in conjunction with sales
- Having business locations in different counties with differing sales tax rates
- Selling at retail and wholesale
- Selling high tax and low or no tax items
Why Work With a Professional Sales Tax Accountant?
Having managed hundreds of sales tax audits, our firm has seen what improper bookkeeping and sales tax collection and reporting can do to a business. For this reason, we offer sales tax bookkeeping on an ongoing basis for our clients.
We are well-versed in sales and use tax law, which helps us keep our clients up-to-date with changes in the law as well as their obligations for monthly reporting.
Call us to get your company going in the right direction.
Frequently Asked Questions
What is the role of the Department of Revenue in sales tax collection?
The Department of Revenue functions like a silent partner in your business. While they don’t participate in operations, they are entitled to a portion of your revenue through sales tax, which you collect on their behalf.
How does sales tax accounting differ from income tax accounting?
Sales tax accounting involves collecting tax before income is realized and remitting it to the state, whereas income tax is calculated on profits and paid after income is earned. Also, not all sales are taxable, but all income is taxable.
What is nexus, and why is it important in sales tax accounting?
Nexus refers to a business’s physical or economic connection to a state. It determines whether a business must collect and remit sales tax in that state. Factors like office locations, inventory storage, or sales personnel can establish nexus.
Why should I hire a professional sales tax accountant?
A professional ensures compliance with complex and frequently changing tax laws, helps avoid costly penalties, and manages audits effectively. They can also provide ongoing bookkeeping tailored to sales tax requirements.
Are all products and services subject to sales tax in Georgia?
No, Georgia differentiates between taxable and non-taxable items. For instance, some services and goods may be tax-exempt or taxed at different rates depending on the county or classification. A professional can help identify and track these correctly.