Module 1, Topic 2
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The Benefits and Drawbacks of Being Registered for Sales Tax

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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