If you own a business in most U.S. states, collecting sales tax is a necessary evil. However, modern technology in the form of a point of sale system can turn a time-consuming nightmare into an effortless operation that requires little to no supervision on your part.
What is sales tax?
Sales tax is a percentage of the purchase price collected by businesses on behalf of state and local governments, with non-compliance risking significant penalties.
When your customers purchase goods or services from you, they are expected to pay a sales tax in most U.S. states.
Many cities and counties also charge an additional percentage of every purchase made in their jurisdiction. Instead of the customer handing it over directly to the government, your business collects the required percentage of the purchase cost and remits it.
Failure to comply with this requirement can result in hefty financial penalties for you, the seller.
What is a POS system?
You should also understand what a point of sale system (POS) is, and how a POS works. In simple terms, a POS is a solution made up of a combination of hardware and software.
It is designed to facilitate secure and efficient payment processing and also assists in many other behind-the-scenes functions, including inventory and employee management, customer relationships management, and report generation.
In general, the system consists of hardware (tablets or terminals, receipt printers, barcode scanners, and cash drawers) and processing software that assists in taking payments and acts as the command center for the POS’s other business-related functions.
How your POS can assist with sales tax collection and calculation.
A POS system simplifies sales tax collection and calculation by automatically applying accurate tax rates across jurisdictions, documenting transactions, managing exemptions, and ensuring compliance with minimal effort.
Gone are the days when you need to use an old-fashioned calculator or cash register to figure out what your customers owe in sales tax. Learning how a POS works to streamline this process just might revolutionize your entire business.
That’s because the system can expertly handle several tasks effortlessly: automatically calculating tax rates even for multiple jurisdictions, and documenting every transaction, as two examples.
These features allow for easy reporting, enabling you to streamline your taxes with full confidence, eliminating the risks that human data entry involves.
The benefits of automating sales tax processing with your POS.
Automating sales tax processing with a POS system reduces errors, saves time for staff, and enhances customer transparency by accurately calculating and displaying tax rates instantly.
Bringing a point of sale system into your company’s operations will transform virtually every aspect of your business, leading to happier and more motivated employees, engaged long-term customers, and a streamlined back-office experience for you and your team.
When it comes to making your life easier and less prone to risks and compliance failures, automating processes such as sales tax collection can make a huge difference. Put your POS to work, and the benefits will quickly become apparent.
Start with the lowered risk that automation brings to your tax submission experience. Your POS software will automatically calculate sales tax, virtually eliminating the chance of mistakes that could lead to errors when submitting tax documents.
The more accurate your submission is, the less likely you will be subjected to additional scrutiny and potentially protracted and costly financial audits.
What’s more, automating sales tax operations will save you hours of your precious time, and that of your staff. Not only will you avoid manually calculating and entering information, but also there will be less of a need for you to check every figure.
As a result, you will be able to repurpose those hours, channeling them into the many other aspects of your business that require direct attention.
Finally, automating your sales tax environment also helps the customers you serve. That’s because the system allows for maximum transparency. Buyers don’t need to guess at the tax they will be charged, or wait for you to do the calculations on paper or in your head.
Instead, their cost will be readily available and accessible on the customer-facing display screen of your POS’s terminal or tablet.
Choose the best POS software for your business.
Although they might all look similar, POS systems differ wildly from each other. That’s why it is important to choose the right one for your business.
Look for one that integrates seamlessly with any existing systems that you are already using. Check to confirm that it will work for multiple tax jurisdictions and locations, allowing your POS to grow right along with your company while always remaining in tune with the tax ecosystem in the markets you serve.
Finally, consider migrating to a cloud-based POS system that removes the need for infrastructure located onsite. Taking this step allows for seamless updates and for you to shift compliance responsibilities to a third party, bringing enhanced security and cutting-edge software without the need to be a tech expert in your own right.
Getting started with your new POS.
Before you can begin to use your POS to automatically deal with sales tax, there are some steps you need to take. Begin by training your staff in the capabilities and functions of your POS, including how to use the software to calculate sales tax. Only then should you migrate your data into the system, making sure that it is accurate.
Throughout this process, be on the lookout for trouble spots. Remain in communication with the provider of your POS to ensure that your infrastructure is properly in place. Don’t hesitate to ask questions and express any concerns. Being shy at this stage can lead to confusion and costly inaccuracies later.
Once you are successfully up and running, don’t drop the ball. Be vigilant about keeping the software updated.
Sales tax software is automatically integrated into your POS solution. If you don’t take advantage of it, you are wasting valuable time and exposing your company to needless compliance risks. Instituting automated sales tax processing also helps to streamline your taxes, providing peace of mind.
If you are ready to start your automated sales tax journey, talk to your payment processing provider today to join the thousands of other companies who have taken this vital step.
