So Many States. So Little Time.

Gone are the days when companies conducted business only in their home state. Doing business in multiple states is a common occurrence today. So, it is important to keep in mind that doing business in more than one state will more than likely trigger tax consequences for each of those states.

There are three factors that can trigger multi-state tax consequences:

  • 1) You hold property in that state,
  • 2) You have employees in that state, or
  • 3) You make or approve sales in that state

The rules are different for each state. Anytime you have one of these three situations arise in a new state, it is important for you to keep your Tax Advisor informed. This will help them ensure you are meeting the filing requirement of each state, which could include registering the business with the state as well as various tax obligations including:

  • Income
  • Sales and Use Tax
  • Payroll Tax

As important as it is to keep up on new states you may be required to file in, it is also important to keep an eye on states you may no longer need to file in. If the property you have previously held in a state has been sold or moved, or has become obsolete, you may no longer be required to file in that state. The same is true if you no longer have employees or sales in that state. This is an important point because some states have minimum amounts due, so even if you aren’t reporting any income, you could still be paying simply because you filed in that state. And you definitely don’t want that!