Know Your Small Business Sales Tax Risks

As we’ve discussed on the Tally Services blog before, there are many new sales tax laws that have come about in Colorado as a result of the Supreme Court’s ruling on the Wayfair case. These new rules will take effect soon and there are big implications for small business owners, especially those selling goods and services online.

There are many factors, such as number of transactions and gross revenue from sales, that will affect the amount of taxes your business will be liable for. The first step is understanding your business sales tax risks to determine if the new rules will affect you.

There is a high likelihood that the new sales tax rules will apply to your small business if you partake in one or more of the following activities:

• If your business sells products or does business within the state of Colorado
• Sell products via an online store or marketplace such as Etsy, Amazon, or Ebay
• Sell products in multiple states and across state borders
• Ship products across state lines to consumers or other business partners
• Your business develops software or apps that are then used in multiple states or by users in other locations
• You or your employees work, provide services, or attend events in other states

If your organization does business in one or more of the following ways outlined above, chances are pretty high the new tax code will apply to you. If you haven’t already, it’s time to you check your tax liabilities and make sure your business in compliance to avoid costly fines and penalties for failure to adopt the new system.

If your business has not yet invested in the following practices and systems, you may be a greater risk of failing to comply with the new tax code:

• Has your business registered in all the states you are currently doing business in (and plan to in the future)? Especially within the state of Colorado.
• Are you aware of and complying with the new state and jurisdictional thresholds that the Wayfair ruling has mandated? And which states have enacted tax regulations surrounding this new ruling.
• Has your business invested in and set up some sort of software tracking system that helps you manage sales and sales tax filings state by state?

Understanding your tax risk and how your business fits in with the new tax rules is an important first step to make sure you’re properly accounting for the new sales tax laws in Colorado. Is your small business struggling to adopt systems and tax collection practices to meet the needs of the new regulations? Tally Services is here to walk you through the changes and help your business get on the right track to properly collect and manage sales tax. Contact us to learn more about how we can help your business recognize and manage your business sales tax risks.