Check Out Leading Tax Group Featured On Major News Outlets As Top Tax Experts!

How to help avoid a sales tax audit

On: May 22, 2020

Facebook
Twitter
LinkedIn
Share
In the state of California, there are some things that you just can’t avoid, including a sales tax audit. Business owners in the state will learn at some point that a sales tax audit is one of those things. While they are not mandatory, a sales tax audit can be triggered by a random occurrence or be because of something that you did wrong. The likelihood that you will go through your business career without seeing an audit, however, here are some tips to help avoid a sales tax audit. Tips to help avoid a sales tax audit When it comes to a sales tax audit, there is not much you can do to keep yourself from getting audited aside from following the rules. In California, the sales tax is 7.25 percent. This rate is made up of a 6 percent state sales tax rate and an additional 1.25 percent local rate. Sales tax in California handled by The California State Board of Equalization (BOE) who are the ones administering, collecting and enforcing the California tax code.  If you are a company that deals with other states in your daily business, then make sure that you learn the sales tax rules for the other states as well. Not doing so can trigger a sales tax audit in California and in other states. Some business types are automatically more likely to be audited than others, which means that while you may follow every rule to the period, you can still end up being on the audit block. Small businesses that make under $10 million dollars are not very likely to be audited, with only about one percent being audited each year. While that should put your mind at ease a bit, don’t think it is a get out of jail free card, as any major error can immediately put the state board or IRS on you and your business. Be on time One of the best things you can do to avoid getting a sales tax audit is to pay all of your payments on time.  Most businesses will pay quarterly taxes each year, meaning that four times a year you will have some pretty serious deadlines that you do not want to miss. Missing these payments will automatically make you way more likely to be flagged in the BOE or IRS system, meaning you could be the next one on their list for an audit. If you want to avoid that, developing a system of solid and thorough record keeping will help you go a long way.  If you do get a sales tax audit, there is a lot that an auditor might choose to go through and not all of it may be warned beforehand, meaning that it won’t look good if they ask for documents that you can’t find or are incomplete. Worse, if an auditor decides it is bad enough, you can get fined for not having everything in order or done correctly, which no one wants. Always make sure to call Leading Tax Group and don’t attempt to do it yourself.
Call Us Now