All of your hard work is starting to pay off and your company is growing. Congratulations!
One thing that is most often overlooked in whirlwind of growing companies is sales
Too often, the rules of nexus are overlooked by growing companies and the next thing you know, you’re hit with a very expensive sales tax audit that can easily wipe out your hard earned profits. Here are four sure fire ways that your company is increasing its sales tax
Customers in New States
Every state has increasingly complicated, ever-changing rules on which goods and services are taxable. There are more than 11,000 different tax jurisdictions in the US. More importantly, there are more than 100,000 sales tax rate, rule, and boundary changes annually. Determining your sales tax liability for these new jurisdictions can be very complicated.
Launching New Products
Expanding your product offering is a great way to find new opportunities and drive new revenues. Are these new products taxable? That answer will vary state by state and depends on a combination of the type of product and where it is sold.
Selling Internationally
The most successful companies sell internationally. If you are considering, or have started expanding overseas, you need to consider how to charge, collect and remit Value Added Taxes (VAT), particularly if you sell via the web. Calculating VAT can be very tricky and with rates up to 22%, you could be facing a huge tax exposure.
Outdated Finance Systems
We find that too often companies are using systems that were designed more than 15 or 20 years ago, before the rules around sales tax got so complicated. Can your current finance system handle today’s sales and use tax complexity?
David Fionda,
Lecturer-Accountancy
Bentley University
Proformative Instructor