Taxing Matters: How to Avoid the Sales Tax Death Spiral

Unless you live and operate a business in one of the few states in which there is no sales tax, you're familiar with the consumption tax imposed by state governments on the sale of goods and services. You sell something, you collect sales tax.

As ubiquitous as the sales tax is in the United States, it's remarkable that so many restaurant operators have been penalized for inappropriately applied or unpaid sales taxes, including criminal convictions in legal actions filed by their state attorney general. The reasons vary from ignorance of state tax law to willful delay or failure in reporting sales taxes.

You can learn from your experience or the experience of others. In the case of tax compliance, the latter is always preferable. The lesson: Your most aggressive creditors are tax authorities. For this reason alone, Restaurant Startup & Growth is launching this department Taxing Matters-in partnership with experts at Avalara, Inc. to help us educate readers on the various taxing issues they might face that could affect their businesses.

Failing to comply with sales tax laws, whether because of ignorance, distress or fraud will subject the business not only to investigation and criminal conviction, but also negative publicity.

In their own words, Avalara is a leading cloud-based software platform provider that delivers a broad and growing array of compliance solutions related to sales tax and other transaction taxes. Their mission is to help businesses, including independent restaurants, achieve tax compliance.