We have had a couple of clients where we stepped in blindly as their previous, in-house accountant left unexpectedly. We found in both cases that we were operating blindly as those previous accountants had left very little behind to guide us. We found no contact lists, no standard operating procedures, very little paperwork. We were fortunate to have a list of logons and passwords for one client and had the use of an excellent IT person at the other, otherwise we had to start from scratch.
As a result, each spent a great deal more for our services than they would have if there had been a binder. Such a binder should contain key contact people (customers, vendors), key accounts (bank accounts, investments, credit cards, loans) and the contact people for the key accounts. There should be a listing of all key logons/user names/user IDs as well as passwords. Obviously, this needs to be locked up for security reasons. Another important section would have important dates-when are bills due, what is paid automatically and what needs to be processed for payment.
Think of the peace of mind that will result if such a binder exists. It will take some work to create it and keeping in updated will be important. It can save a business time and money to establish it so get started today!
Wednesday, October 22, 2014
Tuesday, October 14, 2014
Staying in good graces for Sales tax
So you have determined that you have nexus in several
states. What do you need to do to remain in compliance?
The first thing that you need to do is to register in that
state for a sellers permit. Some states have a special permit for out of state
companies.
Secondly, you need to have your programs set up to calculate
the correct tax rate on the sale. Sales tax is a destination tax. It gets
charged based on the destination that the product is shipped to, not on the billing
address of the customer. A business, then, needs to set up their ecommerce
website and their accounting system to correctly charge and account for the
destination sales tax. Sales tax needs to be charged on product or taxable
services going to any state where your company has sales tax nexus. The more
advanced programs use geolocation technology which determines exactly where the
business is located instead of just zip codes to determine the correct tax
rate. This is especially important for states which also have local sales tax
filing requirements.
Thirdly, if there are any reasons why you are not required
to charge the customer sales tax, then you need to have the correct Exemption
Certificates on file. Each state has different requirements for what paperwork
is needed as well as for how often the paperwork needs to be updated. You need
to be sure that you know what those requirements are and have a system in place
to remain compliant in case of an audit. Noncompliance fines are steep!
Finally, be sure to note the timing of sales tax return
filings for each state that you have nexus in. Some will be monthly, some
quarterly, others annual. Timely filings will prevent late fees and interest
charges.
Sales tax compliance has become an overwhelming task for
small businesses with all of the recent changes in legislation. There are some
fantastic resources that we can recommend to assist you with staying in
compliance.
Monday, October 6, 2014
What you don't know about Sales tax can hurt you
Many small business owners launch their business or branch
off into a new line of business with only a limited knowledge of how their
activities affect sales tax. It has always been a challenge to understand the
sales tax codes of your own state. However, the days of only worrying about
your own state’s sales tax are gone. There are activities that are common
business practice which may make you liable to register and collect sales tax
in multiple states. What are the questions that you should be asking? Following
are just a few:
Are you selling a product or a service? If a service, is it
a taxable service in your state? Is it taxable when combined with selling a
product?
Are you selling from only a brick and mortar location or do
you also have a web presence?
Do you sell only within one state or do you sell in multiple
states?
Are you a manufacturer and/or distributor? Do you sell
wholesale or retail?
Are there circumstances in which you do not have to collect
sales tax? Do you understand those circumstances? Do you have the correct
exemption certificates on file?
What type of sales activities do you do outside of your own
state?
Do you attend trade shows in other states?
Do you have employees or outside reps who market your
product in other states?
Do you do any affiliate marketing?
Do you maintain inventory or warehouse space in other
states?
Do you install and/or repair equipment that you sell in
other states?
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