Is Your Small Business Sales Tax Compliant?

One of the last things anyone ever wants to receive in the mail is a notice from your taxing authority explaining that errors have been found or that they require more documentation from you. It doesn't ever seem to matter if you are guilty of cheating on your taxes or not keeping records, you could have everything documented and filed and sent in a timely manner every time, most of us still start stressing out when we receive a notice like this.

These days, thanks to the Internet, we have so many possibilities for entrepreneurs and it's so much easier to sell our products and services across the country and even around the world. While this may seem to be simple enough, depending on what you're selling, you have to be sure to keep on top of all of the legalities and laws that surround businesses and taxes. Especially those that cross state lines.

Most of us have had to, unfortunately, pay sales tax on most of what we buy. There are differences depending on which state you live in but, for the most part, sales tax can sometimes be a hindrance when shopping for big-ticket items. It can also be a huge obstacle when you are in charge of collecting sales tax from your customers and clients and when you have to be sure you're paying it on time. Wherever you live, it is very important to keep up with sales tax compliance.

Nexus

Trying to determine who you are responsible to pay and which customers you are responsible for charging can feel like a nightmare at first. This is a fairly easy task if you have a home office or sell from your home. But, if you are selling through Amazon's FBA program (Fulfillment By Amazon) you send products to Amazon first so technically, you could be responsible for collecting sales tax from customers where Amazon sells as well. 

Basically, if you have an office in a state, you are responsible to collect and pay sales tax in that state. If you aren't living in a state but you have an employee or employees in another state, this could make you responsible for paying sales tax. The same goes for any time you or an employee travels to another state to perform services or to sell a product. 

The word, "nexus" is a word the law uses to distinguish the connection between the seller and the state. This also can differ depending on which state you're dealing with. This varies from state to state and again, can change at any time. A state will usually consider a physical presence or an economic connection will create a nexus meaning, you should definitely check in with each and every state you are doing business with or in. 

Prepare And Pay

As with practically everything else, the state just wants to take their share of anything you might be earning in their state. My husband and I own a trucking company and each quarter, we have to report each mile and each gallon of fuel purchased for each truck so that the states can either take their share or give us a refund. (Yes, we rarely see refunds, but, it happens!) I thought this was ridiculous back when we first started. I mean, we actually have to report how many miles were driven in each state and where the fuel was purchased so that the states could determine whether or not we owed them money. For instance, if we purchased cheaper fuel in a neighboring state and then drove through our state (PA), PA will say, "Ok, you owe us for the money it would have cost you to fuel up the truck here." So, they pretty much have you no matter where you turn. Collecting sales tax from your customers to pay into the state they live in is the same concept. Thanks to the Wayfair sales tax case, in 2018, the US Supreme Court decided that you can establish "nexus" through economic activity alone. 

You may or not be affected by this in some states. A lot of this will go by the thresholds that each state has set for businesses. For instance, Colorado has a threshold of $100,000 in sales or 200 or more separate transactions. They didn't make this easy for any of us but as long as you stay on top of it all, it shouldn't hurt so bad in the long run.

Record everything and keep solid records and your job will be much easier whether you file monthly, quarterly, or annually. Not to mention, if you were to receive any terrifying letters, you could easily find what you need and get it where it needs to be promptly. 

I know it's easier to throw worrisome notices off to the side. Especially when they come on a Friday or even a Saturday. But, whether you plan to or not, it's easy for this to be forgotten or to be put off and typically, these notices don't give a whole lot of time for you to respond. The quicker you can get to it, the better and the quicker you can get back to your life and your business of course. 

Start a system of some kind. It doesn't have to be 200 spreadsheets or numerous software programs. You could always check with a tax advisor or keep on top of laws for each state on your own. As long as you have accurate, up to date information, and you follow the laws and keep records, you'll get through any potential audit. 

Once you understand who you have to pay and when the next step would be to pay your tax bills on time and keep any receipts and bank records. Sales tax filing doesn't have to be a frightening experience. (It isn't often but, the Department of Revenue can make mistakes too!) Take a night off or buy yourself some new slippers or lots of chocolates to celebrate! (Just be sure if you're buying out of state, to pay your state's use tax if applicable!) 

Is Business Data Necessary?

These days, everything seems to be about data. From social media to advertisements to small businesses, we are actually all a part of the data that is being collected and analyzed. While this may freak some of us out, (especially when there are breaches!) this is how businesses, no matter the size, determine the best products and services to sell us and the best ways to target those products or services to a specific group or groups of people. 

I’m sure you may have noticed Facebook ads that seem to pop up immediately after discussing say, being hungry for pizza or needing to buy body wash or diapers. Maybe you were searching online for a certain product and Google decided that they can show you numerous ads for those products for the next couple of days. It’s obvious that data is being collected every minute of every day. 

If you own a business, you’re most likely collecting data of some kind so you can decide the best ways to move forward. There are so many programs available online for us to keep track of data. These programs are also great for marketers, non-profits,  webmasters, and bloggers too! There are plenty of options out there depending on how big or how small or how much data you need to keep track of to succeed. If you have other employees or partners who also need to keep track of data, it may be in your best interest to find a program or service that will help you better share this information across your network. 

What is data governance? One of the best definitions you’ll find out there is this: Data governance is a set of principles and practices that ensure high quality through the complete lifecycle of your data. It is imperative that the people who need to can have access to the data they need to have access to without fear of being locked out. Essentially, how you govern your data will determine whether you succeed or not. What is business data?

Everything, literally everything, that has anything to do with your business is business data. For instance, my husband and I own a small trucking company. It still amazes me at the amount of time we spend on compiling data for so many different aspects of the business. From events to new laws for each state to fuel purchased for each truck, where it was purchased, how much the fuel costs, how many miles were driven in each state on which day, and much, much more. It is a very tedious process but without this data, we could have a nightmare on our hands whether it comes to state audits or our taxes. We each keep track of certain things and on different computers. A couple of our employees work from their homes as well so it is crucial that we are all on the same page and able to access each other’s data at any time. 

People, places, things. Rules, contracts, laws. What is important to you and your business. Data is the core of your business or organization. Banks and investors and anyone who has any interest in your business or organization will sometimes require this. Collecting business data is expected anymore so rather than pulling an all-nighter (and hoping you can find a few others to do the same.) to gather this information for an audit or even a bank if applying for a line of credit. Trust me, I’ve learned the hard way over the years and now I am very meticulous and sometimes maybe even overbearing at times when asking my husband where or when data for a different department will be entered. Being prepared and always being on top of everything will be extremely beneficial for your business! Not only does it help with your stress levels but it shows potential clients, investors, customers, that you are on top of your game. Beyond that, having your business data governed and functioning properly across all levels and departments could help you with any potential legal issues and will always make you look more professional. 

Freelancing Isn't Just For Writing

When someone says they “freelance” what is the first thing you think of? I used to figure they meant they are freelance writers. But, there are so many other options out there. Especially since so many of us have access to the Internet. Maybe you need some extra income or maybe you prefer to work from home FT and you don’t know where to start. You’re starting in the right place!

What Are My Options?

There are thousands and thousands of options out there. What are your interests? Hobbies? Skills? Maybe you had the best Myspace layout and helped all of your friends create the coolest most colorful pages. If that is something you’re into, maybe you could help others with web development and design. You could start by creating a portfolio or media kit and advertising yourself on a variety of websites.

Teaching and tutoring is another great way to earn some extra cash. You could offer tutoring lessons on Skype and Google Hangouts or you could offer lectures. Websites like Udemy, offer thousands and thousands of courses and topics. You can even sign up to be a teacher on Udemy.

If you are an artist or a musician, you can start accounts online to promote and sell your work. This can also boost your portfolio! Kickstarter is a great way to get your work noticed, grab some funding for a project and find new fans. Maybe you’re not a singer or a painter but you have some photography skills. Why not offer deals for people in your area for sessions? There are so many people out there looking for stock images for websites (I do the same!) and there are websites for you to upload your images, start an account and start selling stock photos. Not only does this bring in extra income for a very minimal amount of work but it also helps to get your name out there and brings repeat customers.

If art isn’t your thing but you are super-duper organized, maybe you would do well as a virtual assistant. You might be surprised at the number of people who are out there looking for someone to keep their datebooks nice and neat and orderly and to make sure they don’t miss a meeting, a birthday, a deadline, or maybe they just need an assistant for a specific project.

Technology is one of the fastest and most promising and most rewarding careers out there. Whether you’re interested in game development, app development, or computer programming, there are so many options out there and so many customers. If you don’t have a whole lot of experience but have always had a knack for technology, you could always pick up some courses or attend school while freelancing on the side.  

One of the most interesting freelance jobs I’ve come across is; research. There are businesses and people who will pay you to research practically anything and everything. You could be in charge of polls, surveys, or simply searching Google for bits and pieces of information. The only experience you really need is to be organized, have time, and know-how to surf the web.

Social media management, Search engine optimization, writing, sales, and marketing, are all in demand. If you have experience and time to be online (lots and lots of time!) the next step is to promote yourself and get the word out!

I Made My Choice So, Now What?

Build your brand and get out there!

You can do this in your pajamas if you want!

Start a portfolio, offer some freebies to prospective clients, ask for testimonials in return, advertise, advertise, advertise!

Start a website to showcase your work and build a social media network for your new business. Tweeting a few times a day about your business and other things related to your business is free so take advantage of this!

Managing Your Income When You're Self Employed

Many people dream of having their own business one day. I think there is something very satisfying about being your own boss and making the decisions yourself. Of course, we all want to be successful and wish for financial freedom but sometimes, being running your own business may not be everything it’s cracked up to be. It takes a lot of discipline when it comes to managing your income.

When you work for someone else you don’t necessarily have to worry about how you will pay for an expensive piece of equipment if it breaks or making sure your quarterly taxes are mailed in by the deadline. There is also something called, a paycheck that employees receive and they only have to worry about depositing or cashing their check in the bank each week and taking care of their personal finances. There isn’t much to fall back on when you are in business for yourself.

One of the most important steps you must take immediately after starting a business is separating personal and business. It helps to start a new bank account for your business rather than keeping everything together. Keeping a notebook of personal bills, basically what your mortgage/rent cost, utilities, car loans, groceries, everything in your personal budget is also beneficial. Making sure you have enough to survive and allowing a little extra for spending is crucial when determining whether or not you are even earning enough when you’re self employed. But, you also need to have enough money in your business account to take care of your taxes and the cost of running your business. If you don’t already have a savings account, now is a good time to start one. You can deposit a percentage of your profit each month (or week, depending on how you are paying yourself.) later, you can make decisions on starting a retirement fund. Keeping accurate records is crucial when you are self employed. Not just for Uncle Sam but for yourself too. You want to be sure you are staying above water and you want to be sure invoices are sent out on time and bills are paid. I like to use various programs on my laptop but I also keep paper records. Stocking up on manila folders, envelopes, legal pads, and pens is important and a tax deduction too!

There will be times when you may find yourself short and it might seem like a quick fix to start using credit cards. However, this could lead to some serious trouble depending on your interest rates and how much you are piling onto them. Sometimes, checking into self employed loans is a much better idea considering your monthly payments may be far lower than credit card payments and the interest rate isn’t typically as high.

When shopping for a hard money loan, you will need to have your records in order so you can show your loan agent that you have money coming in and are capable of handling your personal expenses. They may ask for your last year’s tax return or a profit and loss statement as well. It’s important to keep in mind that it is common for a small business to need help from time to time. Don’t get down on yourself if you feel like everything is falling apart. Chances are, it isn’t and after some brainstorming, seeking help from a professional whether a lawyer or a financial advisor, and taking a minute to relax, you will find that you will bounce back up in no time. Always remember that these small setbacks are some of the best learning experiences.

Go Broke, Die Rich Poetry for the Entrepreneur by William Manchee

I have to start this review out by sharing one of the best parts of this book!! It will help so much just with personal finances, and it is just common sense and some simple math, but yet so many don't get it.
Taken from Go broke, Die Rich:
"Let's say you're a middle class family with annual income of $40,000 a year. If you work 40 years, you will earn 1.6 million dollars. If you're a typical family, you'll buy a $150,000 home, a car every six or seven years and have a half a dozen credit cards maxed out very early in the game.
Now the enemy here is compound interest. It's common knowledge you will pay nearly triple the amount financed over 30 years. For instance, you'll pay $415,213 over 30 years for that $150,000 home at 8.5%. The cars will cost at least 25% more then their initial cost, and you'll be paying the minimums on your credit cards until you're dead and buried. Now if you subtract 25% of your income for taxes, that leaves you with $1,200,000. Subtract $415,000 for what you will actually pay for your home, including all of the interest, and now you only have $750,000. By the time you take away $200,000 for your automobiles you only have $585,000 left to live on for 40 years!
This is less than $15,000 a year for food, clothing, utilities, insurance, gasoline, home and auto maintenance, medical expenses, recreation, entertainment, education, vacations and retirement......"
WOW! When you put it that way, it is insane that this is what the majority of us are lining on!


William Manchee is an incredibly entertaining writer, and he will keep you interested, laughing, second guessing yourself, your ideas, your plans, and offers some of the best advice for anybody who has a business, or plans to start one.
My husband and I own our own tractor trailer, so we do say this is our business. We do our schedule C each year, get a 1099 from the company he is leased onto, and well, unfortunately, pay our own repairs, tolls, fuel, etc. Even if we have just 1 employee, (my husband), this book provided some very excellent advice and suggestions for our long term and short term goals! It also has a lot of important information for me and our small online business.
It doesn't much matter what business, how big or small, this is a guide that should be considered a required read for every entrepreneur.
It certainly isn't boring by any means, the author will keep you cracking up at parts, with his witty poetry, and you will be sure to relate to some of the poetry and some of the personal stories about the author, or his clients.
He starts out with a bit about his life, his education, mistakes, and his family, and goes into honest detail about what happened to his family, how they made choices, and so on.
He also touches on just about everything, in great detail about specific business failures, very common mistakes, and explains how to not make those mistakes yourself.
William Manchee has been advising small business entrepreneurs for over 30 years, so who better to offer tips and ideas on how to succeed in today's economy?
From problems with taxes, to lawsuits to employee theft, to legal issues, to starting over to bankruptcy, everything you need to know and understand is in this book. I guarantee you'll learn something from it, it doesn't matter how many years you have experience with your small business, and I am positive you will gain some very important knowledge that could possibly save your family and business.
I know the price for an attorney and adviser is pretty steep, but when you think about how much it would save you and your family in the long run, it is in your best interest to have one. That being said, I also believe that this book offers more then your money's worth, and you will almost feel guilty for only paying a little over $10 for such a valuable book!
I would of course, recommend this book to anybody who aspires to make it big, succeed, own a small to maybe not so small business, and anybody who already owns a small business. You'll find something in here that will be sure to help you, along with quite a few laughs.
Don't feel threatened by the author's experience and education, he has written this book in very easy to understand language, charming, and all very common and real problems and dilemmas that don't have to destroy everything you worked so hard for. It may even save your marriage or household finances!
Have you ever read this book? Did you learn anything from this?? I would love to read any comments from you!!


**I received a copy of this book in return for my honest review**