Whenever you’re selling anything, either online or in a brick-and-mortar environment, it’s important to be aware of your state’s sales tax requirements. If you’re selling anything with the intention of making a profit to those inside your home state, a sales tax license (in those states that require them) is essential.

The State of Michigan has a tiered payment schedule for those of us that have state sales tax licenses. Depending on how much sales tax you expect to collect throughout the year, you’re required to pay annually, quarterly or monthly. Since I estimated a particular amount for the course of a year, I was dropped into the quarterly category. 2007 was a short tax year though, because I started the company in the middle of July and wasn’t liable for sales tax before August 23 or something like that. I also didn’t anticipate well over 99% of my sales going to customers out of state.

Basically, I forgot about my quarterly status, thinking I was on the annual tier for some reason. I realized today I had $4.80 of tax due in October for a single sale just before the Sept. 30 cutoff date. I’ve been accruing penalties and interest on it since, to the tune of a whopping $0.59. The next quarter’s payment is due at the end of this week, and since I incurred no tax liability during that quarter (I’m such a slacker) I got to fill out that return with zeroes.

This really could have been a lot worse. Had I been selling merchandise in-state with volume, I’d have a much larger liability to contend with. Also, had I missed this second quarter, Michigan would have estimated my tax based on the annual estimate I gave them when applying for my license, and then they would have charged me interest and penalties based on that (much larger) amount. Once that happens, I’m responsible for that amount, regardless of what I would have actually owed.

 I did mention initially that part of this blogs goal was to help you learn from my mistakes so you don’t make them, here’s a perfect example! Thankfully my foul-up was done on a pretty small scale. It may be helpful to add tax due dates to your calendar. That was something I initially planned to do, but in the rush and excitement of getting everything set up, overlooked.