By Princess Jones
Sales tax holidays are periods of time when a state will waive sales tax on certain items. Many times, they are used to stimulate back-to-school and other seasonal shopping traffic. Currently, there are 17 states that offer sales tax holidays at various times of the year. If your state is one of them, you can use the added incentive to do some big business.
Know Your Rules
Sales tax holidays can vary greatly from state to state. Generally there are only certain eligible classes of items and there are caps on how much consumers can buy. For example, in Texas you can have sales tax waived on most clothing, shoes, and school supplies, provided the items retail for less than $100. But in Florida, the exemption applies to clothes, footwear, and certain accessories up to $60. Florida also has a ten day exemption period while many other states narrow it down to just one weekend.
The best place to get the most accurate information about your upcoming sales tax holiday is to contact your state department of revenue or comptroller. They will know exactly what dates your state is using this year and all of the ins and outs of the laws.
Set Up Your Payment Portal
If you have a very small business, you might still be calculating receipts by hand. In that case, you just need to not collect sales tax on that transaction. However, most small businesses use some sort of payment processing system, either online or in-person, to process transaction. And those applications require that you enter the correct settings for sales tax holidays. You’ll need to adjust several factors in your sales tax calculations — the type of items, the amount of sales tax collected, and the date range this will all happen during. Check with your payment portal for directions on how to make sure you’re collecting the right amount of sales tax during the holiday.
Plan a Sale
You’re not going to be the only business to choose from this sales tax holiday. Give your customers a reason to choose your store over the many other options. Add a sale that they can stack on top of the sales tax. Be sure to choose inventory that fits under your state’s exemption list. Make it clear that the sale will be coming at the same time as the sales tax holiday. Use signage and marketing collateral to announce far enough in advance and to also draw in foot traffic the days of the event. And don’t forget to alert your marketing newsletter subscribers and your social media networks.
Sales tax holidays bring in crowds. Make sure you’re staffed appropriately to handle the crush. The state department of revenue often keeps stats on the average increase in sales from these tax holidays each year. Use that to calculate how much staff (and inventory) you might need and take steps to bring in temporary or seasonal help.
Also, make sure your staff has been properly trained on how the exemptions work. They need to be knowledgeable enough to be able to answer customers’ questions and guide them to the right products. It might be worth it to invest some time in a short training session or to create a cheat sheet they can keep in their pocket for the day.