When your business operates within multiple states, you’re going to have to deal with a variety of state and local taxes for each one. Specifically, most states have their own sales and use tax, income tax, and other tax rules that drastically vary from state to state. Are you prepared to juggle the sales, use, income, and unique local taxes for each and every state in which you do business? If not, states will be happy to show you the error of your ways with a large, unanticipated tax assessment. Don’t forget the added interest and hefty penalties!. Unfortunately, knowing the laws is not enough. The procedures and rules for registering, collecting, and remitting all these various taxes varies states to state as well. Are you prepared to follow proper rules and procedures in each of the states in which you do business?
Of course, knowing the laws as well as the procedures and rules for implementing them is dependent upon a clear understanding of which states can impose taxes upon you. The location of you, your business, and your inventory all, amongst other things, can determine which states have the authority to impose tax upon your business.
The complexities of state and local tax are often overlooked by taxpayers who rest their anxieties solely on the IRS and federal tax issues. However, the consequences of failing to properly collect and remit state and local taxes can be just as, if not more devastating, to a business. It is vital for all businesses to educate themselves on state and local tax variances to avoid such a result.