Basic government/tax compliance

  1. You need to determine the state regulations for the states where you are incorporated and potentially where you have employees, assets or office locations.  Each state is different but most will have a business entity tax due annually, property tax, sales and use tax and potentially other local taxes.  The best resources to find out your responsibilities, and you should do this upfront because missed deadlines in this area mean fines and penalties that accrue and usually are not waived, is to go to the state department of revenue or treasurer’s website.  You should make a calendar of all tax filings that are due.  Talk to your peers and lawyers can also assist.  If you are incorporated in Delaware and do not have an office there you will need to sign up with a registered agent who will forward state correspondence to you.
  2. Start a nexus analysis of all the states in which you do business, a list that you update with how much business you are doing in each state – list payroll, physical offices, assets/inventory and sales.  Are your sales subject to sales tax?  Figure out how to collect this from your clients and remit to the government by the required deadlines.  Use tax is the flip side of sales tax and you should monitor compliance of this in your Accounts Payable area.  If you are not charged sales tax and you should have been, you need to self-assess use tax and remit it.  Think about your large purchases and review the state’s rules on their website for sales and use tax.
  3. Lastly, annual income tax filings need to be done for federal and states that you operate in.  You should hire a tax preparer that can assist you with the preparation of the returns, when and in what states to file.  Talk to your peers for a preparer that will give you a good quote, work effectively with your accountant to track the relevant financial data, will make sure you file by the required deadlines and help you monitor not just income tax compliance but be a resource for all the other tax filings you have to do.  Your tax preparer should be able to help you do tax planning if you are in a profit/tax paying position and help analyze net operating loss carryforwards if you are generating losses.  If you have exposure to multiple states or operate in other countries, they should have experience in managing those filings and worldwide tax exposure.
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