December 20, 2018
In the past, online retailers were only required to collect state and city sales tax in states where they had a physical presence, such as a warehouse, employees, or an office. But earlier this year, the Supreme Court changed everything for e-commerce companies when they upheld a law permitting states to charge sales tax to out-of-state sellers, regardless of whether or not a business has a physical presence in that state.
The implication for small businesses is massive. The Court’s ruling opened the door for states to either activate older laws requiring online sellers to collect sales tax, or draft new legislation. Many states are eager to start reaping the benefits of a new-found revenue stream, and a handful have already implemented changes that go into effect this month, or in early 2019.
Collecting sales tax is a multi-step process, and online businesses could find themselves in the midst of a chaotic tax environment if they don’t start preparing for sales-tax-related issues, and making the necessary adjustments to remain compliant. Sales tax compliance can be tricky. Certain mistakes, like failing to remit sales, can lead to fines and penalties, and unintentionally capture the unwanted attention of tax auditors. There’s a lot to take into consideration, especially for small businesses filing sales taxes for the first time. The best option is to seek out tax professionals to prevent sales tax errors, fines, penalties, and even jail time from occurring.
The collecting, filing, and paying of sales taxes is serious business, and the intricacies of sales tax laws are becoming more complicated by the minute. Don’t let the new laws cause your business to derail. Instead, be aware of the impact of partnering with an experienced accounting firm for e-commerce sales tax preparation and compliance. Follow the example of hundreds of other businesses and use the solutions Boris Benic and Associates has been providing for 25 years.
© 2018 Thomson Reuters/Tax & Accounting