First, don't panic.
Missing a California sales tax return is common, especially for new business owners. The important thing is to address it as soon as you discover the issue.
If you're registered with the California Department of Tax and Fee Administration (CDTFA) and fail to file a required return, several things can happen:
Late filing penalties may be assessed.
Interest may accrue on unpaid tax balances.
CDTFA may send notices requesting the missing return.
Continued non-filing can result in additional compliance actions.
Many business owners assume:
"I didn't make any taxable sales, so I don't need to file."
Unfortunately, that's usually not correct.
If CDTFA assigned you a filing requirement, you're generally expected to file a return even if you had zero sales or zero tax due.
This is commonly referred to as filing a "zero return."
Go to:
https://www.cdtfa.ca.gov
Then access Online Services and review your account.
Look for:
Past-due returns
Notices
Missing periods
Outstanding balances
Even if it's late, filing is almost always better than continuing to ignore it. CDTFA allows businesses to file returns online.
If sales tax was collected, submit payment as soon as possible to minimize additional interest and penalties.
This situation deserves immediate attention.
Remember:
Sales tax generally isn't your money.
It's money collected from customers that should be remitted to the state.
I've seen situations where businesses collected sales tax throughout the year and accidentally spent it on:
Payroll
Rent
Inventory
Operating expenses
Then the filing deadline arrived and there wasn't enough cash available.
The sooner you address the issue, the more options you'll have.
This is more common than you might think.
I've worked with business owners who were:
One quarter behind
One year behind
Multiple years behind
The worst thing you can do is ignore the problem.
Start by identifying all missing periods and getting accurate bookkeeping records together.
Once the books are organized, the returns can generally be prepared and filed in order.
A few simple habits help:
Keep your bookkeeping current.
Reconcile accounts monthly.
Review sales tax liability balances every month.
Set calendar reminders for filing deadlines.
Use QuickBooks sales tax tracking properly.
Save sales tax collections separately when possible.
If you're only one return behind, handle it immediately.
A missed return is usually much easier to resolve when it's fresh than when it turns into multiple missing periods and several notices later.
Most sales tax problems start small. The businesses that act quickly typically have a much easier time resolving them.
If you're in Los Angeles, Whittier, Pico Rivera, Santa Fe Springs, West Covina, Norwalk, Commerce, or surrounding areas, DJO Bookkeeping can help organize your QuickBooks records, reconcile accounts, identify missing filing periods, and get your books ready for accurate sales tax reporting.
Disclaimer: This article is for informational purposes only and is not accounting, tax, financial, or legal advice.