Your business is growing. You’ve added some new employees, some of whom may even work outside the traditional office setting. Your distribution has expanded and your products are reaching new customers every day. Since each state you do business in has different tax requirements, now is a good time to check for a new sales tax nexus and taxability laws. Once you find a new nexus, review that state’s sales tax laws for accurate calculation and filing information.

Here are some tips on taxability and sales tax nexus in 2015:

  1. taxability

    Taxability is simply the quality of being taxable.

    Sales Tax Nexus
    Each state has different laws and those laws change frequently. Internet sales that used to be free from tax requirements are now being taxed. For example, this year, Amazon and its vendors will owe taxes to over half the states where they do business. The days of tax-free online shopping are coming to an end across the country. The details are also getting trickier. In some cases, even web advertising that leads to sales in another state can create a nexus for your company!

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  3. Is E-file a Payment Option?
    Payment options vary from state-to-state. Companies are required to  pay taxes electronically in some states such as California, Connecticut, New Mexico and North Dakota while other states aren’t set up for electronic payment at all. Once you learn which states your company has a nexus in you can check that state’s requirement and payment options. To find information on a certain state, or  visit Avalara’s State Sales Tax Map
  4. Prepayment Obligations
    Much like  your e-filing and other taxability details, your prepayment obligations vary from state-to-state. For your new nexus, be sure to look at pre-payment options and requirements. If you owe substantial taxes, some states require special payment plans. Prepaying schedules often differ from standard filing times. Some areas even require filing with a higher frequency than others do, as often as once a month! The more jurisdictions you do business in, the more likely it is that you will have to keep track of multiple filing schedules.
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  6. Reconcile your Taxes Payable
    For each new nexus you will need to reconcile your accounts. Use accounts payable, invoices and receipts to stay current on taxes owed. To do this, take your account balance at the start of the accounting period and add the total amount billed. Then subtract the amount of total sales and use taxes paid. Reconcile this amount with your current sales tax payable account balance. Any remaining discount or rounding balance can then be added to the correct general ledger account.   If you use financial packages, you probably already realize the importance of real time updates and reduced hardware and implementation costs. Just be sure, if you’re using cloud-based financial services, that you are getting the most out of it. You can do this by employing both a fully automated and  an integrated cloud-based sales  tax solution. Fully using these services makes reconciliation easy and accurate.
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