Do You Know When Your Company Needs State Tax Advice?
"Life Events." They can be great or extremely challenging. You know, like turning 16 and getting your driver's license. Graduating from high school or college. Getting your first job, first date. Getting married. Your first baby and so on. Then come some tragic or obviously difficult events, like the death of a loved one. We can all relate to some or all of these experiences.
How does this relate to state taxes?
Well, companies (like humans) experience "life events" such as:
- Formation of their business (type of entity (C corp, S corp, LLC, etc.), location, etc.)
- Research and development of their product or service
- Manufacturing or supply chain development (vendors, suppliers)
- Buying, leasing or building a facility (i.e., manufacturing, distribution, office, etc.)
- Hiring employees and/or sales reps
- Soliciting sales across the state lines
- Hiring independent contractors
- Shipping products across state lines
- Selling goods online
- Storing goods (inventory) in a third party warehouse
- Servicing / repairing products sold (either with own employees or third parties)
- Installing goods
- Selling / purchasing software (online software and services / SaaS / Cloud Computing)
- Providing services to customers in other states (some services performed in home state; some services performed in customer's state)
- Forming additional entities
- Acquiring other companies
- Having transactions between entities that are commonly owned or controlled
- Selling assets or stock of an entity
- Incurring losses
- Drop shipping products to customers
This list is just a sample of the transactions or "life events" a business may experience during the course of its existence. Each one of these events have a state and local tax consequence that could positively or negatively impact a business. Companies that proactively address these issues are less likely to have regrets later on when the auditor or buyer of their business comes calling.
In business and in life, change is inevitable. Overpaying state taxes is a choice.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.