What Is Sales Tax?
Sales tax is a tax collected from customers on taxable goods or services and remitted to state or local tax authorities. Businesses act as the collector, ensuring the correct amount is charged, recorded, and paid on time.
Sales tax is money you collect from customers and pass along to the government.
What Sales Tax Includes
Sales tax management focuses on accurate tracking and compliance, including:
Tax collection tracking – Recording sales tax collected on customer transactions
Tax rate management – Applying the correct state and local tax rates
Sales tax liability tracking – Monitoring sales tax owed to tax authorities
Filing preparation – Preparing sales tax returns for required filing periods
Tax remittance – Paying collected sales tax to the appropriate agencies
Reconciliation & reporting – Ensuring sales tax records match filed returns and financial reports
Why Sales Tax Matters
Proper sales tax management helps businesses:
Stay compliant with state and local tax laws
Avoid penalties, interest, and audits
Maintain accurate financial records
Reduce risk as the business grows or expands into new jurisdictions
Sales tax must be collected, tracked, and remitted accurately. A consistent sales tax process helps protect your business from compliance issues and costly errors.