Filing your Pennsylvania sales taxes can be a challenging task for businesses. To help your business steer clear of potential sales tax pitfalls, Gift CPAs experts have gathered some essential tips. In this blog, we will help you understand four common mistakes to avoid when filing Pennsylvania sales taxes and how leveraging the right resources can help you streamline the process.
- Inaccurate Reporting
One of the most frequent mistakes that businesses make when filing sales taxes in Pennsylvania is inaccurately reporting their taxable sales. The Pennsylvania Department of Revenue defines taxable sales as the total amount of money “imposed on the retail sale, consumption, rental or use of tangible personal property including digital products. The tax is also imposed on certain services relating to such property and on the charge for specific business services.”
To avoid mistakes, carefully maintain records of all your businesses transactions. Organization is essential and Gift CPAs recommends conducting regular internal audits to verify your records with state regulations. This proactive approach can help you identify any discrepancies early on.
- Neglecting Local Tax Rates
Pennsylvania allows local jurisdictions to impose their own sales tax rates on top of the state sales tax rate. Failing to consider local tax rates can cause underpayment or overpayment of sales taxes. Every jurisdiction can have a different rate, so businesses must be aware of the specific rates that are applicable to their location.
To simplify this process, QuickBooks, a leading online accounting software, can calculate sales tax based on the current tax rates. It utilizes automated location tracking to ensure that the local tax rates are accurate and correctly applied to each of your business’s transactions. Not only will this process save you time, but it also minimizes the risk of errors that can come with manual calculations. Remember to regularly check local tax rates so that your business remains compliant with the latest regulations.
- Misinterpreting Exemptions and Exclusions
Pennsylvania offers specific exemptions and exclusions that can impact the sales tax responsibilities of businesses. Failing to understand and apply these exemptions correctly can lead to overpayment or non-compliance.
QuickBooks allows you to categorize your business transactions based on exempt sales. This provides you with a report that gives a clear overview of your transaction history. It is crucial that you regularly review your eligibility for tax exemptions and exclusions so you can benefit from potential tax savings.
- Neglecting Deadlines
Missing a tax filing can incur unnecessary costs for your business. Pennsylvania has specific deadlines for filing sales tax returns, and delayed submissions may lead to penalties and interest charges.
Stay up to date on Pennsylvania deadlines and set reminders to proactively manage your tax filing requirements. This allows you to avoid any detrimental consequences associated with late tax submissions.
A quick tip: It is important to establish a routine for your tax filing. Set aside dedicated time to review and submit your sales tax returns well before the deadline. It is better to have a proactive process rather than a reactive process to prevent any last-minute stress and the likelihood of errors.
Navigating the complexities of filing Pennsylvania sales taxes can be challenging, but with the right knowledge, you and your business can streamline the process. It is important to utilize all your resources to prevent common mistakes and ensure that you are adhering to state regulations. QuickBooks is one resource to help track sales tax liability, but businesses must understand the rules of each state and locality they do business in. Gift CPAs helps our clients find the resources they need for their particular sales tax responsibilities. By staying well-informed and adopting proactive practices, you can simplify your tax filing and concentrate on what really matters – running a successful business.
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Contact Gift CPAs for more information on our full scope of accounting and business services. We have years of experience working with small businesses to help with bookkeeping, taxes, and other business needs. Make an appointment to meet virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster!
