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New Year, New Rules – Confirm Your Sales Tax!

Creating a nexus for taxable purposes.

Businesses need to stay up-to-date on changes to sales tax laws and make sure they are complying with their obligations. One way to do this is to work with a resource that provides up-to-date information and monitoring for changes, such as a CPA or a service like Avalara or Intuit’s sales tax services. It’s also important to regularly review and update your sales processing systems to ensure that you are properly collecting and recording sales tax obligations. Failing to comply with sales tax laws can result in fines and other penalties, so it’s important to stay proactive.

Sales tax is changing dramatically. There was a Supreme Court ruling in mid-2018 that stated it is, in fact, legal for states to require out-of-state retailers to collect sales tax on sales to customers within their state. South Dakota was the state at the center of this case, but other states are very quickly following and enacting their new regulations about who must collect and file sales tax within their states.
 

Generally, most states require that you have met a certain threshold in terms of either the number of sales within their state or the dollar amount of sales within that state, thus creating a nexus for taxable purposes. For example, South Dakota says that if your business’s gross revenues from sales into South Dakota exceed $100,000 OR your business made sales for delivery into South Dakota in 200 or more separate transactions, you must collect and file sales tax. California and Texas have also recently updated their laws, along with numerous other states with similar nexus.

So what is a small business to do? First, ZümiFi recommends that you identify a resource that will provide up-to-date information and monitoring for ALL sales tax changes that may affect your business. This might be your CPA, or you can sign up for a service such as Avalara or Intuit’s sales tax services. Second, you will want to stay in touch with this resource and make sure that you are aware of any new sales tax obligations you may incur so that you can also update your sales processing systems to ensure you are capturing and collecting those sales tax obligations properly.

Don’t get caught unaware – get on top of your sales tax obligations and monitor that regularly!

New Year, New Rules – Confirm Your Sales Tax!

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