Do You Know When Your Company Needs State Tax Advice?

Apr 11th 2013
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"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: 

  1. Formation of their business (type of entity (C corp, S corp, LLC, etc.), location, etc.)
  2. Research and development of their product or service
  3. Manufacturing or supply chain development (vendors, suppliers)
  4. Buying, leasing or building a facility (i.e., manufacturing, distribution, office, etc.)
  5. Hiring employees and/or sales reps
  6. Soliciting sales across the state lines
  7. Hiring independent contractors
  8. Shipping products across state lines
  9. Selling goods online
  10. Storing goods (inventory) in a third party warehouse
  11. Servicing / repairing products sold (either with own employees or third parties)
  12. Installing goods
  13. Selling / purchasing software (online software and services / SaaS / Cloud Computing)
  14. Providing services to customers in other states (some services performed in home state; some services performed in customer's state)
  15. Forming additional entities
  16. Acquiring other companies
  17. Having transactions between entities that are commonly owned or controlled
  18. Selling assets or stock of an entity
  19. Incurring losses
  20. 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.


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