If your business is expanding, compliance with sales
tax rules can be daunting. The current
economic climate has increased your chances of being
audited. With so many states trying to balance their
budgets, they are increasing their efforts to find
unpaid tax through audits. Audits can significantly
drain time and resources.
Here are some points to keep in mind:
Determine if you created nexus in
any new jurisdiction. Ask the
following questions to determine
nexus. Have you sent an agent or
sales representative to a new state?
Delivered and installed a product in
a new state? Did you hire new
employees that work from A remote
location? Answering yes may mean
that you have created nexus in a new
Research the laws in the
states- Contact the
appropriate authorities in the
state, city, county and town and
identify colleagues that are located
in the exact geographies to make
sure there is nothing unique about
that specific area's requirements.
Using zip codes may not provide
enough detailed information about
the rules in specific locales.
Documentation and keeping
good records-. Make sure
you have an established process for
recording sales in all of your
ledgers that is readily available;
i.e. - accounts payable, receivable,
invoices, etc., Keeping good records
reduces the strain on your business
should you be subjected to an audit.
Create a chart and see if you can
automate a process to eliminate
spending extra time when technology
could be used.
Exemptions- Have any of the
exemptions certificates you have on
file expired? You will need to
replace those exemptions
certificates to continue not
charging tax to your customers.
How are you required to make
payments?- Find out HOW and
WHEN the authorities prefer to
receive payment. Do they want
estimated payments in advance?
Also, some municipalities have the
capability to receive payment via
ACH or wire, others may not, which
may require additional record
keeping and follow up to make sure
payments are received and applied,
so you can reconcile and document
Is the current address on
file?- Make sure you are
receiving notices on time and know
when you should have received them.
Ignorance is no excuse under the
law and for not remitting sales tax
payments on time. Make sure the
local authority has the proper
address on file to send notices.
taxability- Know if the
products you are selling are treated
as exempt or taxable for sales tax
purposes. You might be pleasantly
surprised.. Or not.. But it’s
worth investigating before you're
These are just a few items to
keep in mind when you take your business across
state lines. At Boris Benic & Associates, we help
make sure these and many other factors are addressed
so you can focus on selling and expanding your
additional information on sales tax matters please
Boris Benic, CPA,
or click here to email Boris.
In a brief consultation
he can assess your situation and identify areas of
potential opportunity and risk.