In our outsourcing group, we file a lot of what we call "non-income tax" forms. These are pitfalls for many small businesses, and lots of startups don't even know that this kind of tax exists. It's not easy to understand or know when these taxes are applicable, but you can't ignore this stuff!
Non-income tax filing includes sales tax, use tax, personal business property tax, and business license tax. It can also include excise tax in some states, licensing fees for certain professions, and certain payroll fees.
This post will focus on why you may need to file a return for sales or use tax, but we won't get technical. Suffice it to say that if any of the information might apply to you, you need to follow up on the issue by getting more specific accounting advice.
Use tax is paid, filed and treated like sales tax, but is handled by the buyer. If the seller of a good or service doesn't charge you sales tax, you're in charge (get it?) and need to pay use tax. You must determine the local rate of tax―where you are―and file a use tax return.
If you sell products, even if you're not shipping them and use other fulfillment vendors, you probably need to charge sales tax. Fulfillment by Amazon or other out-of-state warehouses is not a way to get tricky and avoid state sales tax responsibility. Although Amazon was famously a place to buy and sell to avoid some paperwork, that's not the case anymore. States are targeting e-commerce companies and forcing them to register for seller's permits.
Some main points to consider:
When in doubt, charge tax!
Need some help? Our outsourcing team includes tax compliance experts. We can provide tax advice and help you file the necessary returns.