Garron KramerIf you run a business in more than one country, one of the first surprises is that “tax on sales” works very differently from place to place. The US uses sales tax, while the UK and South Africa use VAT. Getting this right on your invoices matters, because it affects what you charge customers and what you owe the tax authority.
Sales Tax in the United States
In the US there is no single national sales tax. Each state (and sometimes city or county) sets its own rules and rates, and whether you have to collect tax depends on whether you have “nexus” in that state.
What to keep in mind
- Sales tax is usually charged only on the final sale to the customer
- Rules on which products and services are taxable differ by state
- You register, collect and file with each state where you have nexus
- Contractors you pay may need 1099 reporting to the IRS
VAT in the UK and South Africa
VAT works differently: it’s charged at each stage of the supply chain, and VAT-registered businesses can usually reclaim the VAT they pay on their own purchases. In the UK this is administered by HMRC; in South Africa, by SARS.
What to keep in mind
- Once registered, you show VAT on your invoices and file regular returns
- You can generally reclaim input VAT on business purchases
- UK businesses keep digital records and file under Making Tax Digital
- Registration thresholds and rates change, so always check the current figures
“The tax rules are different in every country. Your invoices should reflect the rules of the business that issues them.”
How BizHub Helps
Each business in BizHub is set up for its country. A US company gets sales tax and EIN fields, while UK and South African companies get VAT labels, VAT numbers and the right tax authority on their records. Your default tax rate is applied to new invoices, so the numbers on your invoices, bills and reports stay consistent.
Rules change regularly, so confirm the current requirements with the IRS or your state, HMRC or SARS before you file.
Patrick Phandera
Garron Kramer