As we head into year-end, it also is a busy season for restaurants and retailers that have increased transactions due to the anticipated uptick in holiday season sales. Accountants and bookkeepers with restaurants, retailers and other service-based brick-and-mortar clients often are challenged to keep up with the needs of these clients.
On top of the added volume of sales activity at this time of year, there also is the issue of overpaying sales tax, which must be addressed.
Avoiding sales tax overpayments for restaurants and other retailers starts with sales tax automation
For restaurants, third party delivery apps, like GrubHub or DoorDash, further complicate the calculation of sales tax. Many restaurateurs are overpaying in sales tax and may not even realize it.
Given the recent changes in e-commerce laws and the complexity of managing these multiple revenue streams, many restaurant owners may be confused or unaware which entity is responsible for remitting sales tax to the state. Accountants can help their restaurant clients by ensuring that the POS system is configured properly and advising on the specifics of the state’s tax liability laws.
Changes to e-commerce laws from a recent Supreme Court ruling resulted in many states enacting their own changes or laws to require third party apps to collect and remit sales tax. Accounting professionals can support clients by researching and understanding how each third party app is handling sales tax.
From there, the POS needs to be configured to ensure sales tax is NOT collected, if the app now is responsible. Otherwise, the business owner may believe they owe sales tax on the sale.
In order to effectively and accurately manage sales tax for busy restaurants and retailers, sales automation becomes critical. A modern point of sale system such as DAVO by Avalara enables you to automate every task within sales tax management including:
- Calculating tax for each sale
- Impounding sales tax daily
- Preparing, filing and paying the tax owed to the specific states when due
- Streamlining set-up of sales tax for firms and their clients
- Eliminating the risk of missed payments and penalties
Automating sales tax also will free up your firm to focus on more strategic advisory services. In addition your client no longer has to think about managing sales tax funds and you no longer have to worry about their sales tax issues such as:
- Missed payments and penalties — With sales tax automation, taxes are automatically filed and paid on time and in full which eliminates missed payments and late payment penalties.
- Failure to leverage filing discounts — If your client operates in one of the 27 states that offer on-time filing discounts, those discounts are automatically calculated, collected and refunded. Sales tax automation easily allows you to take advantage of discounts, where applicable.
Inefficient impounding of sales tax — When you use sales tax automation you can be confident that funds will be available when it is time to pay because funds are calculated and set aside daily through the POS integration. There is no need to run reports and manually move sales tax funds.
The amount of sales tax due is automatically compiled and paid. You can be confident that the funds are there when it comes time to pay.
You can learn more about how to help your retail and ecommerce clients avoid double taxation and other issues with DAVO Sales Tax in "The Accountant’s Guide to Sales Tax Automation."
As an accounting professional, you can use DAVO to seamlessly integrate sales tax automation and access low-cost benefits by joining the accountant referral program. Do this now and receive a bonus through the end of 2022. See full terms.
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