Tax Planning for Small Business Owners

Nobody can force you to plan about taxes before the time comes for you to pay them. However, the cost of not planning ahead might even cost money in the long run and might even land you in prison for tax evasion. For small business owners, an accounting system that places taxation as a major concern can prevent them not just from paying the right amount of taxes but may even reduce them into a smaller amount.

Read More

Wayfair case affects remote sellers as Economic Nexus standard is established

The historic South Dakota v. Wayfair case has essentially granted all states the authority to impose sales and use tax on businesses using an economic standard basis. With this decision, even if your business never steps foot in a state, it could become subject to sales tax based on its amount of sales or number of transactions in that state. Even for those businesses that ship by common carrier, these businesses now have potential sales tax to collect. For many years, businesses were only subject to sales tax based on the physical presence standard due to a ruling in the case, Quill Corp v. North Dakota (1992). Within this case, the Supreme Court held that physical presence was a necessary prerequisite for sales tax imposition due to the Commerce Clause, an obligation in the constitution that state legislation cannot burden interstate commerce. Twenty years later, Quill was overturned in South Dakota v. Wayfair, Inc. Not only did the Supreme Court disagree with the 1992 Quill decision, it stated that the physical presence rule “is an incorrect interpretation of the Commerce Clause” (extracted from Supreme Court of the United States Syllabus on South Dakota v. Wayfair, Inc., et al. October term, 2017). South Dakota’s sales tax legislation regarding economic presence was upheld.

The problem with this ruling is that it isn’t just applicable to South Dakota. Many states, if not all, are issuing new legislation (or emergency legislation in some cases) to incorporate this economic presence standard. What’s more problematic is that each state is drafting its own set of rules with different enforcement dates. South Dakota’s economic presence standard is enforceable as of November 1,, 2018 and provides that nexus is met if a business has more than $100,000 of gross receipts or 200 transactions in South Dakota. On the other hand, Pennsylvania is enacting a $10,000 sales threshold with no transaction threshold as of April 1, 2018.

The economic nexus rules are going to place a significant burden on businesses with remote sales. Going forward businesses need to track in each state, gross revenue, number of transaction, tax rates, local sales tax obligations, enforcement dates, etc. Once a business determines it has met a threshold, it will be required to register with the state, collect sales tax, and file sales and use tax returns. Many professionals fear the ruling on sales tax will eventually translate to income tax obligations. While there is much uncertainty in this post-Wayfair world, there is a definitive heightened need for businesses to operate with strong record-keeping, scrutiny, and compliance as a result of the new economic nexus standards. Contact MKS&H today for help navigating your sales tax obligations.

How Do I Set Up Payroll in the United States?

When setting up payroll in the United States, there are certain rules and taxation that you need to take note of. As a general rule, the primary concern of any company in the United States is that they need to comply with the tax laws including the federal, state, and individual income tax of employees. They also need to pay for social security, Medicare, as well as take care of other concerns. Below are the steps to set up payroll for your business in the United States.

Read More

199A Proposed Regulations

There’s been a lot of talk about the new tax law changes imposed under the Tax Cuts and Job’s Act (TCJA) Trump signed into office last year and rightfully so, considering it’s the largest tax reform signed into law since 1986. The most notable change for businesses was the decrease of the corporate tax rate to a flat 21%. This change buzzed into the ears of many business owners, making them wonder if they should change their business structure to a C Corporation.

Read More

The United States Netherlands Tax Treaty

No matter where you live abroad, you need to pay your income tax if you are a citizen of America. Thus, if you move to the Netherlands, you need to know that the tax regulations still pertain to you and that there are Dutch tax regulations that you also need to follow. Thus, the United States and the Netherlands have joined a treaty to help its residents from double taxation and prevent income tax evasion. Read More

Reduce Insurance Costs by Encouraging Employee Wellness.

Protecting your company through the purchase of various forms of insurance is a risk-management necessity. But just because you must buy coverage doesn’t mean you can’t manage the cost of doing so. Obviously, the safer your workplace, the less likely you’ll be to incur costly claims and high workers’ compensation premiums. There are, however, bigger-picture issues that you can confront to also lessen the likelihood of expensive payouts. These issues tend to fall under the broad category of employee wellness.

Read More

Consider all the Tax Consequences before Making Gifts to Loved Ones.

Many people choose to pass assets to the next generation during life, whether to reduce the size of their taxable estate, to help out family members or simply to see their loved ones enjoy the gifts. If you’re considering lifetime gifts, you should be aware of which assets you give and the ones that can produce substantially different tax consequences.

Read More

International Financial Reporting Standards

The consequence of growing international trade is that companies have to deal with different provisions and laws when they have dealings with other countries. Without a proper safeguard, companies have to use different accounting standards that are difficult to understand. Read More

How Do I Organize A Business in The United States?

Organizing your business protects your entire company. There are many reasons why you should organize your business, and these include tax purposes and protection against possible legal disputes. Another benefit of organizing your business is that it makes it easier for your business to obtain things such as insurance, bank accounts, and loans, as well as set up the payroll.

Read More