If your business is expanding, good for you! You’re acquiring new customers, maybe even crossing state lines and venturing into new markets. But before you collect a dime, be sure to educate yourself on the sales tax requirements of any new states you do business in. Nexus (aka the requirement to collect/remit sales tax) laws vary from state to state. Go north a state, and it could be no problem! But the state just south of you may have a different view on its right to require out-of-state vendors to collect sales tax.
Who hasn’t been to a trade show in Orlando at one time or another? Did you
Ever shipped something to a customer in California? Did you tax the delivery charges? Should you? The answer is “it depends”. Delivery charges are exempt as long as they don’t reflect a mark-up, are stated separately, and are shipped directly to a retail customer.
If you participate in any internet affiliate advertising programs, the Big Apple says you have nexus.
And one final “I never would have thought of that” moment: If you sell to exempt organizations in Texas, they will typically have an exemption certificate (make sure you collect and manage it!). But an employee of that organization who is making a purchase on behalf of the organization still has to pay tax. The certificate can’t be used to exempt purchases by employees, even if they’re making them on behalf of the organization.
There are two ways for businesses to manage taxes...collect correctly; or don't - and pay more later.
The bigger, more complex states like CA, NY, TX, and FL are actively revising laws. Only by incorporating the latest sales and use tax rules into your operations can audit risk be lowered and penalties and fines be avoided.
The consequences of negative audit findings in these states are sometimes enough to bankrupt a business or compromise its long-term growth plans.