Filling out a sales tax return could be pretty gruesome for any business, more so because each state has its rules and regulations. Generally, there are three existing filing forms: paper, online, and hybrid systems. Each one of these methods has its advantages and disadvantages as per the nature of the business and the level of complexity regarding the sales taxes imposed. In this blog, we will break down the nature of the individual filing formats to help guide you on the choice best suited for your business. We will also be discussing how tax preparation outsourcing services can make it easier to file returns, saving time and ensuring error-free processing.
What is Paper Filing of Sales Tax Returns?
Paper filing concerns submitting physical tax forms by mail. Even though this has been an old method in use, it is still available for some businesses.
Advantages of Paper Filing
- No Internet Required: You can complete and mail paper forms by hand.
- Paper Filing Outdated: Many small business owners are comfortable with the paper filing method.
Disadvantages of Paper Filing:
- Time-Consuming: Filling out paper forms by hand is much more time-consuming
- Postal Service Slow: Mail is processed slowly, and you also run the risk of missing the deadline
- Error Susceptible: Paper forms that are handwritten are likely to be incorrect. This leads to pricey audits.
- Only a Few States Will Take Paper Filings: States have phased out some accepting paper filings.
Who is a Good Candidate for Paper Filing?
The disadvantage of this option is that only businesses that prefer manual processes and do not have reliable access to the internet can use it. Meanwhile, the popularity of this option is decreasing day by day because of the push of states toward digitization.
How Do I File an Online Sales Tax Return?
Online filing of sales tax returns has become a common activity for all sizes of businesses. Most states require sales tax returns now, as it is much easier to process.
Advantages of Online Filing:
- Convenience: You can file returns at any hour, from any location.
- Speed: Processing is faster, and refunds or payments take a shorter time.
- Accuracy: Online forms decrease the error rate due to automatic computations and reminders.
- Instant Confirmation: You obtain instant proof that your return has been submitted.
Online Filing Disadvantages
- Technical Problems: If the internet crashes or the system is down, you have to wait longer.
- While most people are savvy enough to use an online platform, others will be frustrated and find it difficult to file in an online environment.
Who Should Use Online Filing?
- Most businesses, especially those with several branches or large turnover, should also file online because it is less prone to errors and more reliable compared to manual input.
What is Hybrid Filing for Sales Tax Return?
Hybrid is a mixed method of filing both in paper and online. You may file part of your return online but mail supporting documentations.
Advantages of Hybrid Filing :
- Flexible: Businesses can use a mix of the paper and electronic filing systems.
- Accessibility: It allows to partially file online even though some documents must be mailed.
Disadvantages of Hybrid Filing:
- It gets challenging to manage online and paper filings
- The Process gets Lengthier because it incorporates a mix of two methods
Who should use Hybrid Filing?
- Hybrid filing is ideal for businesses operating in states where partial filing online is allowed, or companies with complicated tax situation which need both formats.
Why Outsource Tax Preparation Services for Sales Tax Returns?
Manually dealing with sales tax returns may become laborious and prone to errors. That is where there is a need for tax preparation outsourcing. Organizations can make this process even simpler by outsourcing their tax preparation services.
The following are the advantages of outsourced tax preparation services.
- Accuracy: The service providers are professionals who are accustomed to following each tax regulation.
- Saves Time: They get all the filing done and leave your internal resources free.
- Cost-Effective: You save on penalties and costly errors.
- Compliance: Service providers keep your business in line with state and federal laws.
- Knowledge Update: They are current with the latest tax legislation to ensure your business is up-to-date.
If your business is not able to file sales tax returns effectively, then the best option will be outsourcing tax preparation to save time as well as reduce errors.
How to Decide Between Paper, Online, and Hybrid Sales Tax Filing?
In selecting one among the three filing methods, use the following factors:
Business Size:
- Small businesses, especially in small sales, can use paper filing
- Large businesses can use online filing since it is very efficient
State Requirements:
- Check if your state accepts online filing
- Some states do not accept paper filing
Internet Access:
- Companies operating in areas with limited or undependable internet may opt for hybrid or paper filing
Simplicity of Tax Returns:
- Paper filing can be used for simple returns.
- Complex returns with multiple jurisdictions of tax are well suited for online or hybrid filing.
Time and Resources:
- If your business doesn't have time and tax knowledge, you can outsource the tax preparation service for a smoother process.
Conclusion
There are choices in types of sales tax returns: paper, online, and hybrid. The most vital thing would be to have a variety in which you can choose what's best for your business. More states are starting to require electronic filing, and this option has the benefits of speed and accuracy. Any company looking for another avenue to cut down the hassle may want to consider outsourcing tax preparation. Not only does it save you time and money, but it also ensures all tax laws are followed.
Interested in smooth tax filing? At Fino Partners, we provide expert outsourced tax preparation and tax preparation outsourcing services to help your business stay on the right side of compliance, whilst keeping the business apparatus busy with increased growth. Get in touch today to see how!
