There isn’t a person in the business world that will be happy to see an auditor. The same will be true for you if you are doing business in Kansas which deals with selling goods or certain services. The only thing you can do to survive the sales tax audit is to be prepared well before time and train yourself about the audit process to sail through it unscathed.
Taxes and tax audits are a necessary element for any business. Some businesses are audited because they appeared on the Kansas sales tax auditor’s radar by another auditor. Others get selected due to their enormous business volume.
Some businesses remit a significant amount of tax, for which they are audited, while a majority get selected randomly just because they were unlucky.
Understand How to Survive Sales Tax Audit in Wichita, KS
In order to understand how to survive the sales tax audit, you need to understand the sales tax’s basic principle. Sale tax doesn’t apply to all financial transactions. Sales tax is charged on sales and rents of tangible personal property.
Tangible property can simply be defined as property that is movable at the time of its sale, or the buyer can take it home with him. Some types of services like repair and installation are also taxable under the sales tax.
If you happen to deal in the sale or purchase of products and services that fulfill the mentioned criteria, prepare yourself for a sales tax order on a yearly basis.
How to Prepare for the Audit?
The answer to the million-dollar question of the business world is how to prepare yourself for something you are not an expert at? You have to work on the reverse engineering principle to decode this.
The most tested and best way to achieve this is by preparing for a sales tax audit on a regular basis. The preparation consists of regular billing and reconciling of sale transactions and purchase transactions. You need to improve and maintain the internal accounting system of business on a daily basis so that no discrepancy is left for the auditor to find out.
Business owners usually don’t pay attention to identifying and sorting books of accounts, which leave behind a mess of unverified and unsorted books that will eventually serve as a gold mine for sales tax auditors. You, as a business owner, must review sales transactions, identify all transactions that are exempt from tax.
All exempt transactions must be backed by exemption certificates duly signed and verified by customers and accepted by you.
Another important aspect of sales tax is a tax refund. If you mistakenly paid tax for some purchase, you may request a tax refund from the state or a refund from your supplier. Similarly, if you owe tax on purchases, you should pay it as soon as possible, preferably on your next return.
Finally, make sure that all financial transactions during the tax year reflect on your returns. When the Kansas sales tax auditor comes knocking on your door, provide him an isolated workplace with all the financial records you already have self-audited. Some important components of financial records are vendor and customer invoices, refund vouchers, etc.
To survive the Kansas Sales Tax Audit, you must consider it as a periodic business task. Keep the beast on a leash; otherwise, it has the ability to destroy your business.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.