does a pos collect sales tax

As a small business owner, you want to find technology solutions that will solve multiple problems for you. So as you’re shopping for a Point of Sale (POS) system, you may be asking yourself: does a POS collect sales tax for you? 

Read on to learn about how POS systems work with sales tax collection, and where you may need to add an integration in order to automate sales tax for your small business. 

Why does your business need a POS system? 

POS systems are great for small businesses with frequent purchases, like retail stores, restaurants, bars, or food trucks. 

You may already be familiar with how a POS system helps you handle payment, but a good POS can be so much more. A good POS system combines hardware and software to give you one place to manage all aspects of your business. 

Not sure what POS system is best for you? Check out our guide on how to choose the right POS system for your business. 

An equally important part of your business is finding a system that helps you charge, collect, file, and pay sales tax. Without a system in place, many small businesses struggle to stay on top of their sales tax. 

Why it’s important to stay on top of sales tax 

Nobody enjoys the experience of receiving a large tax bill at the end of the quarter or month. But filing sales tax on time and paying in full is crucial for any small business. 

As a business owner, you and only you are responsible for sales tax. That means you are responsible for ensuring that sales tax is charged with every purchase, the sales tax amount is set aside, sales tax is filed on time, and the correct amount is paid when due. 

But what happens if you do fall behind on sales tax? In short, it will cost you. 

There are penalties for every month you are behind on sales tax, and in some states this can culminate in jail time. 

It’s important to note that you as an individual are responsible for sales tax – not your business. This means that if you close your business, you are still personally responsible for paying off your sales tax debt. 

Filing your sales tax on time can also save you money. There are 27 states that currently offer a program that reduces the sales tax amount due if you collected and paid early or on time. That’s right – if you’re on top of your sales tax, you may actually end up paying less of it! 

Getting behind on sales tax can have some serious consequences, which is why it’s a smart idea to try and automate as much of the process as possible to ensure that you don’t miss filing and paying your sales tax. 

The question is – can a POS system help you automate sales tax?

Does your POS collect sales tax for you? 

Most POS systems can charge sales tax for every purchase, but without additional integrations no POS system will set aside sales tax funds, or file and pay sales tax for you. 

What does this mean for you? 

First, you must manually calculate how much sales tax was collected by the POS system. Then, you need to set that money aside – ideally in a separate account – so you don’t accidentally spend money meant to pay sales tax. 

Then, you must identify when your sales tax bills are due, and pay the full amount on time. Some businesses pay sales tax every month, while others pay every quarter. 

While a POS system can help you charge sales tax with every purchase, they do not by themselves help you automate sales tax. 

The good news is that many POS systems integrate with DAVO to help you completely automate sales tax. 

How to automate sales tax with your POS system and DAVO

DAVO integrates with some of the best POS systems to fully automate sales tax for you, so you don’t have to worry about getting behind on your sales tax. 

Setting up DAVO with your POS system is simple, seamless, and requires only a one-time setup unless something substantial changes with your business. 

Once it’s set up, DAVO will automatically set aside sales tax money at the end of every day, so you don’t have to keep track of how much to save for sales tax. When your sales tax bill is due, DAVO will automatically file and pay your sales tax on time and in full. This way, you can be eligible for the on-time discounts if you live in one of the 27 states that offer that discount. 
Check out if your POS system integrates with DAVO so you can put your sales tax on autopilot.