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Sales Tax exemption certificates: Yes, you must keep track of it!

April 26, 2010 by admin Leave a Comment

Sales Tax exemption certificates: Yes, you must keep track of it!

In my business career I have seen this happen three times: Once I was a credit manger, once as a major account sales rep, and once as a financial consultant, companies that sold products out of state and did not keep exacting records of sales tax exemption certificates. In two of the three cases, the result was devastating for the business. The state sales tax commission team audited the business and heavy fines were imposed along with sales tax in arrearage including hefty late fees. Then it seemed all the neighboring states-through some miracle of unhappy coincidence sent their sales tax audit teams in as well (although they swore they never tipped off the other states, yeah right!). It was a major contributing cause for two of the three businesses to end operations!

So what to do? If yours is a new business, include a sales tax exemption certificate with every new account package which should include a signed credit application and a request for a freight guide. If you are the owner of a small business make this part of your day before your employees start working! I have found sending the new account package works best if you send this to your customer’s controller. This is generally a very visible person of director level who will know where to route this very important paper work. Also, if the controller has any questions about your businesses policies and practices, he or she will generally call or have an appropriate person call to “iron out” any details. Send these out by mail since most will require a signature and request that the packet returned complete (so you only have to handle it once). For the record, I am a huge fan of “if you touch it, you scan it” (if it comes to you in paper form). Many of these tax certificates will come to you via email-save them to a CD and store a copy off site. The same holds true for the certificates that are mailed or faxed, scan them then save them to a CD, and store a copy of the CD off site. Keep a log of every packet that your business sends out (an Excel worksheet should be sufficient), and check them off as they return. Later as your business grows you may delegate this to a trusted employee like an office manager and later the company controller.

Following this simple practice of keeping sales tax information up to date can keep you company in good standing with the state and prevent costly and heartbreaking audits for your small or new business.


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Tagged: accounts, Advice, finances, Save Your Small Business

Accounting Tips For SMB Owners

January 8, 2009 by Andy Wendt Leave a Comment

Accounting Advice for SMB OwnersWhen running an SMB there are lots of pitfalls one should watch out for, and accounting practices are one major concern. Many SMBs employ an outside accounting firm to “keep their books”, and this can be a very good idea. However, it is also wise to learn accounting basics or tips yourself. Here are a few accounting tid-bits that an SMB owner may want to know:

1. Protect your company from check fraud – Ask that your bank never cash a check made out to an individual, with the exception of payroll checks.

2 Keep up to date on all tax rules and changes in accounting rules – Government tax rules change on a regular basis. It is a good idea to keep track of these changes yourself. You should never blindly depend on your accountant.

3. Review all cost and expenses – You should review your invoices often. Don’t play catch up with your records; use them to find ways to cut costs and also to find better and cheaper suppliers. Doing this will save you money in the long run

4. Keep your business and personal accountants separated – Many business owners keep one account for personal and business finances. This can cause problems when tax time comes. Keep things separated, it will make things much more simple when it comes time to track your business finances, moreover it will make creating a personal budget less of a problem.

5. Double and triple check your numbers – Many company’s pay the same bill twice due to accounting errors, costing them large amounts of money and many hours of labor to correct. If you check, check and recheck your numbers you will catch errors before it’s too late.

6. Keep records of bills paid – Your financial records and invoices serve two purposes. One, they can be used for cost control. But two is much more important, they can also be used when tax time comes around.

7. Basic is a good thing – An accounting system should be simple and easy for you to use. Having more than one checking account when one will do can make things much harder. So keep it simple.

8. Accounting software – Accounting software is easy to use and most packages are affordable. Many of these programs, such as Quickbooks, will turn your receipts into financial reports, making it a great tool for any SMB.

9. Hire someone to help at the office – It is best to be well versed in accounting, but having someone to help you is often the best way to keep things in line. Accountants are an invaluable extra set of eyes helping to watch your money.

By: Randy Lewis

Tagged: Accounting, Advice, Owner, SMB, Tips

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