Benefits and Drawbacks of Sales Tax

As with any area of business there are both benefits and drawbacks to registering your business to collect sales and use tax. First, let’s take a look at the benefits of being registered for sales tax in the US. When you’ve registered for sales tax it means you can: 

• Charge your customers sales tax on the goods or services you sell to them
• You can claim sales tax exemptions for certain types of goods or services
• Your business will gain a certain level of credibility and professionalism 

Now, let’s take a look at the downside of being registered for sales tax: 

• You have an obligation to register for sales tax in each state where your business operates including where you sell your goods and services to (which can involve a lot of paperwork)
• You must remember to keep accurate records of your sales
• You must be aware of and adhere to the specific sales tax regulations in different states
• You must make sure you file and pay your sales tax returns in each state on time to avoid any legal action being taken against you