Ensuring your online business is tax compliant

Category: Taxes 111 0

As a designer, you are keen on ensuring that the content, design, and functionality are properly intertwined to give the brand its feel. While these aspects are key to your business, other things are equally important. For instance, if you ignore the practical aspects of running an online business may not be more pronounced as the storefront but if neglected, the consequences may be quite costly and one of these is Tax compliance.

Where does your client need to collect taxes?

You must seek to understand whether you need to collect sales tax in your state or not. In addition to collecting tax from your home state, you may also need to collect tax in other states and countries where you have a nexus- where you have a legal obligation to collect and remit taxes. With an online business, your physical location doesn’t necessarily mean that your business is located there, nope, you only need to have one, several or all the items in the nexus checklist.

Do you have a tax license in the locations where I have nexus?

In every applicable state or country, you should apply for a business license. This is to allow you to begin collecting taxes legally in that jurisdiction. Ask a corporate audit service professional on the application process or you can even Google to get the procedure. Depending on where you are applying from, it may be free to apply or may require some application fees.

Set up the sales tax collection

Tax rates vary dramatically from state to state and therefore complicated. Ask your consultant to install for you the best-automated collection system, which will ensure that it is easy for your clients to pay.

Tax compliance is a requirement for any business, whether in the US or any other country. Therefore, with an online business, you need to ensure that you’ve got the most efficient system for tax collection to avoid penalties.

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