The recently mandated nexus laws on tax for businesses have sent a lot of owners in a state of confusion. Not only are these tax laws applicable for businesses with a physical and online presence, but they should also be followed for stores that have a threshold of sales across different states. As a result, there are many things for consideration such as the number of sales, physical stores present per state, specific laws per area, and deadlines for filing.
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TaxConnex, a sales tax consulting company that helps review and prepare returns, understands the frustrations of business owners. In this post, they will explain the ways they are able to help in the new tax return rules to help you with compliance.
Sales representatives and professionals offering products and services on a different state
One of the ways that may trigger the economic nexus is high-ticket sales or services of an individual in a different state. If you have a business with multiple sales representatives or professionals offering services, they may not be mandated to have revenue in a different area without paying tax-related dues.
Thus, the tax consulting company helps determine these sales out-of-state and reviews the laws imposed on each one. This thorough review of sales in multiple areas, especially those with contractors, representatives, or employees reaching far-flung areas will help prevent audit concerns.
Businesses participating in conventions, exhibits, festivals, and other related events
These commerce-related trade shows can also be a part of the tax filing in a business especially if the sales reach a certain threshold. This can either happen in two ways:
- Bulk or multiple sales of low-ticket items: Since trade shows typically last for days up to a week, the bulk or multiple sales of low-ticket items can trigger tax laws that need to be complied with for your business.
- High-ticket sales: Electronics, cars, large business deals, and other expensive items may instantly trigger an economic nexus due to the pricing of the offers.
Nevertheless, the sales acquired in all trade show participation should be logged, as well as the specific details pertinent to the new tax law. A tax consultation team will take note of every sale within all the out-of-state trade shows that your business has joined and will look into the nexus-related laws within the event location.
Companies with technicians serving in certain areas
Service-based companies with physical locations may find themselves in tax-related trouble if they have technicians who provide services on addresses that are clearly outside the mandated areas.
For example, if your business is allowed to serve certain cities within the state and one particular client has an address that is just outside the border, this can trigger the new tax law being imposed in your business.
As a result, one should be particular about the addresses of clients to prevent problems during auditing. A professional tax consultant can help you look over all the sales in your log and find addresses that do not belong to your mandated service areas. These will be computed and matched with the new tax laws applicable in the area.
Affiliate programs with multiple agents across different states
Affiliate marketing has become one of the latest trends with the rise of technology. For businesses to continuously gain sales, many of them offer affiliate programs to those who have platforms to sell.
Unfortunately, the return preparations in such programs can become so convoluted because different states have varied revenue tax laws. For example, some companies are not allowed to sell or promote certain products through email marketing such as in the state of Utah. If you’re the business owner who has recently opened up an affiliate program, tax return consultation is something to consider to keep your company safe from auditing penalties.
Businesses with products on a separate inventory
May small businesses now do not rely on a home inventory to keep their items in stock. An example is the Amazon FBA program that helps small business owners keep their inventory in a particular location, ready to be shipped when there are sales.
However, this could also trigger a nexus-related issue because keeping an inventory in a certain state with sales means that these transactions were made in a separate area from your business locations. Such situations include:
- Keeping your inventory in a different state and a sale was made on the same area
- Your inventory is located in the same state of your business, but a sale was made in a different state
- The inventory is in a different state, and sales were made in another state apart from your business and inventory location
A tax consulting team will consider if any of these situations apply to your inventory and sales relation while determining which ones will be affected by the current sales-tax laws.
Tax Return Preparation? Don’t Let It Confuse You
The new laws regarding sales can be a burden to all business owners, but don’t let it confuse you. With professional help, you can make return preparation a breeze while keeping the new nexus issuances in mind.