Sales tax concerns if you sell through multiple channels
Businesses have new ways to sell today, as marketplaces such as Amazon, TikTok and the business’s...
If your online company looks to expand its interstate sales in 2021, know one thing: Your plan involves risks and new responsibilities. The key is learning how to manage both, as sales tax non-compliance or errors can bring stiff penalties.
You’re not alone
Almost two out of three businesses (65%) plan to grow across state lines in 2021, according to a recent TaxConnex-commissioned survey of 100 financial leaders and their concerns about multi-state sales tax obligations.
Surveyed companies’ concerns heading into the new year were:
About one in five (19%) companies said they don’t have the right resources on staff; nearly one in 10 (8%) said they weren’t able to hire fast enough due to budget limitations or a hiring freeze.
Overall, 71% of respondents to our survey weren’t completely satisfied with how they manage sales tax. (Almost half [46%] of respondents still manage nexus – their sales tax footprint in a tax jurisdiction – in-house and 47% prepare and file sales tax returns in-house.)
Risks of hiring – especially now
Online sales are probably more popular than ever right now. The potential for growth is huge. And adequate personnel becomes key when your sales tax obligations grow along with your company.
As the pandemic continues, many companies still have staff working remotely. Maybe you’ve discovered that employees can work remotely full-time and still be productive, and so you’re thinking of slashing costs on office space. As we adapt to the new normal, many may continue to work as they’ve become accustomed over the last several months. That will save many businesses on office space, but may result in additional sales tax obligations. If your business has employees working in a different state than where your office is located, or if you hire employees outside of your home office state you could be creating nexus in a new state.
Nexus means you have obligations to a given taxing jurisdiction, and it comes in two forms: economic nexus which was reinforced by the U.S. Supreme Court’s landmark Wayfair decision in 2018; and physical nexus created by a direct connection to a state or tax authority. Examples of the latter include a brick-and-mortar location – or the presence of employees.
Overworked staff
As your business grows, both in revenue and employee size, your sales tax obligation could be growing with it. Attempting to handle expanding sales tax obligations in-house (no matter where the employees are) also comes with risk. Keeping up with compliance involves a lot:
Clearly, compliance is not something you should leave to chance as your company expands online sales nationwide.
As sales tax continues to become more complicated, know you have someone that can help. When you work with TaxConnex, we eliminate the burden and complexity of sales tax. Your employees have enough on their plate already, let the experts manage sales tax for you. Contact us to learn what it means when sales tax is all on us.
Businesses have new ways to sell today, as marketplaces such as Amazon, TikTok and the business’s...
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