Sales tax is a state mandated tax whereby consumer goods are assessed a fee on the final price. Sales tax serves as a form of revenue to the state to augment tax revenues. In most states, a portion of the sales tax is passed back to the locality for certain programs and compliance with the law.
A major source of local government revenue is the meals tax. Most states authorize the right of local governments to raise revenues utilizing a meals tax. It is defined differently in each state. If a business is involved in the food service sector the bookkeeper needs to grasp the fundamental concepts of how the food tax is structured. In addition, this tax collection process is accounted for in a similar manner as sales tax.
Many businesses especially retail have to collect sales tax as a function of their legal mandate from state governments. In effect the business is a collection agent for the state. If properly set up, this collection process is automated using modern retail accounting software.
Almost all retail based operations require a Point of Sale (POS) System to properly record the customer and product activity. What is a Point of Sale System? How is it set up? What information should we get from this system? How does a small business owner benefit from this system?
An audit is defined as a methodical examination. Audits are grouped into two principal sets – financial and organizational compliance (usually related to licensure). For the small business entrepreneur, it is almost unheard of for them to have an organizational compliance audit.
