Expense Category
Professional Services

What expense category are sales taxes?

Sales taxes are a type of indirect tax, which are taxes levied on the sale of goods and services. The tax is usually levied on the final consumer, but can also be levied on the producer or retailer. Sales taxes are usually calculated as a percentage of the sale price of the goods or services.

In the United States

In the US, state and local governments generally impose sales taxes. The federal government does not impose a sales tax, but some states do have a sales tax. The states that have a sales tax generally use it to fund state and local government services.

Which Expense Category is Sales Taxes?

There is no definitive answer to this question as it depends on how your business operates and what accounting method you use. However, sales taxes could be classified as either a cost of goods sold (COGS) or an operating expense. If you sell products that are subject to sales tax, you would likely include the sales tax in the product's price and would therefore classify it as a COGS. If you provide services that are subject to sales tax, you would likely include the sales tax in your service fees and would therefore classify it as an operating expense. Ultimately, it is up to your business to decide which expense category is most appropriate for sales taxes.

The information provided in this article does not constitute legal or financial advice and is for general informational purposes only. Please check with an attorney or financial advisor to obtain advice with respect to the content of this article.
Sales taxes
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