Industries | State and Local Tax

Sales Tax for Manufacturing

Sales Tax for Manufacturing Companies

Manufacturing companies must consider all moving pieces when calculating sales tax liability. From exempt equipment repairs to documenting vendor certificates, there is a lot of information that needs to be tracked in order to remain compliant.

Source Advisors can help you identify where you have sales presence (nexus), determine the taxability of your products in specific states, and form the best compliance strategy that meets your specific needs so you can focus on running your business.

Understand Your Sales Tax Responsibilities with a Comprehensive Nexus Analysis

The best strategy to stay ahead of risks or liabilities is to know where your business has nexus exposure. The tax specialists at Source Advisors will conduct a comprehensive nexus analysis to determine where your company has reached economic and physical nexus and whether your products are taxable.

Once this information is established, the team will help you understand your reporting requirements, implement automated software solutions if needed, and strategically plan for the future to avoid penalties and fines.

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.

This 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.

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.

The Source Advisors Advantage

State and local tax services at Source Advisors are completed by distinguished experts with decades of cumulative experience solving large and small tax challenges. Put Source Advisors’ track record of successful strategies and solutions to work for you. Schedule your free 30-minute, no-obligation consultation with our specialized team of professionals today.