Common Tax Mistakes Made by Manufacturing Companies
- Ignoring or not understanding the nuances of sales tax rules for your specific products.
- Dealing with heavy sales volume and a variety of SKUs without the proper organization or technology can easily lead to sales tax errors for the manufacturing industry. Automated tax software can provide real-time tax calculations and easily manage important documents, like certificates.
- Not applying the correct tax rate or exemptions.
- Not collecting the proper certificates from vendors or customers.
- Whenever applicable, it is important to present or collect exemption certificates.
- If you are an exempt buyer, be sure to present your exemption certificate to your vendor so you are not erroneously charged sales tax.
- If your customer claims they are sales tax-exempt, you must collect the proper certificate from them. More importantly, confirm its validity and expiration date.
- If you are a sale for resale business, your reseller customers must present a Resale Certificate. The exemption will not count without this certificate as proof.
- Whenever applicable, it is important to present or collect exemption certificates.
- Overpaying sales and use tax. There are several reasons why sales and use tax overpayments occur including vendor errors, missed exemptions, and lack of internal resources to capture errors. Explore our Reverse Sales & Use Tax Audit services to recover overpaid sales and use taxes.
- Missing out on tax incentives. It’s not uncommon for manufacturers to miss out on Federal and State-level R&D Tax Credits and inventory tax credits. Read on to learn about qualifying for tax credits as a manufacturing company.
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