Many of my clients hold webinars once a month. Others sell their products both in a brick and mortar store and online. I have one client in particular, whose online presence has grown tremendously. In going over his books, I realized he was paying a lot of sales taxes outside of the state his company is incorporated in.
Small and medium sized business owners, listen up. Although my client’s business is in Florida, his website is hosted in another state that requires vendors to collect sales and use tax. It’s called a sales tax nexus and it allows states to collect sales tax on sales made to customers via the internet or even at trade shows made within the sales tax nexus state. So to tax or not to tax, that is the question. Here are some of the factors to consider:
- PHYSICAL LOCATION – If your business is incorporated or physically located in a state that claims sale tax nexus, then be prepared to collect sales tax from your clients who live in that state. The same applies if your website is hosted in a nexus state or you have a franchisee or licensee. If you have a company that sells a product that requires a digital download, prepare to collect taxes per download in a nexus state.
- EMPLOYEE AND FREELANCE WORKERS – If you have employees, freelance workers or sales associates who operate, sell or install products or perform services on a regular basis in a nexus state, you may be required to collect taxes. Some of the states include: California, New York and North Carolina.
- ADVERTISING – If your business does a lot of regular advertising via newspapers, magazines, billboards or postcards that are delivered by anything other than US Mail, then you may be responsible for sales taxes.
To tax or not to sales tax is a confusing topic, especially for new business owners. We are working with our client to sort through his sales tax issues. If you have questions about whether you should be collecting sales taxes, you should contact your bookkeeper or feel free to e-mail me.
Our company is already doing business in multiple states as we change our current business name to BRIGADE BOOKKEEPING and launch BRIGADE BOOKKEEPING DEPLOYED. Our new company name says it all; we will be keeping the books for clients, and through our sister company, BRIGADE BOOKKEEPING DEPLOYED, we will do the books anywhere our clients want us to go in South Florida. We’re just about a week away from our big name change and we can’t be more excited!
