Zoom, Slack, Asana, the cloud ... These have all created new opportunities for the small business to expand its presence well beyond the local community. Today’s small business may have a physical presence in one state, employees or contractors in another and sell its products or services in still other states. This creates new selling opportunities but along with these new opportunities come complexities and challenges related to multistate taxation and Nexus. States and tax jurisdictions are looking for every tax dollar they can get these days and as a result, both the number of audits and penalties imposed are increasing.
Whether you are considering expansion into multistate commerce or are already there, Profitwise Accounting can help you navigate through the rules of multistate income, sales and use tax. We not only can help you understand your tax liability, if any, but identify potential tax savings.
We have a research team that will analyze the potential multistate issues of your business including:
- Nexus (the activity required by a business within a state before the state in question has the legal authority to impose a tax on the business)
- Application of the (fair warning given and some minimum connection established, between a state and the person, property or transaction it seeks to tax)
- Relevance of the Commerce Clause (substantial nexus, fair apportionment, non-discrimination towards interstate commerce, fair relation to state services)
- Federal legislative limits bearing (prohibits a state from taxing the net income of a company operating in multiple states whose only business activities within the state consist of the solicitation of orders for the sale of tangible personal property)
Understanding multistate taxation laws can quickly become very complicated. Rules that were developed before the advent of the Internet and e-Commerce, inconsistent rules between states, vague definitions and constantly changing rules are just a few of the challenges. We stay-up on the latest rules and regulations and have developed expertise in helping multistate companies with their accounting and tax related issues. If you're unsure if your small business is currently in compliance, we'd be happy to help.
Updated April 13, 2022
