Author: Dona Basu

Tax resale certificates and drop shipping are two essential components of the modern e-commerce landscape. As online shopping continues to thrive, businesses must navigate the complexities of sales tax regulations and ensure compliance. In this section, we will explore the role of tax resale certificates in drop shipping scenarios, highlighting their importance and providing valuable insights for both retailers and suppliers.

Drop shipping has revolutionized the way products are delivered to customers. It allows retailers to offer a wide range of products without the need for inventory storage or fulfillment logistics. Instead, retailers partner with suppliers who ship products directly to customers on their behalf. This streamlined approach has opened up countless opportunities for entrepreneurs and small businesses to enter the e-commerce market.

However, when it comes to sales tax obligations, drop shipping can present unique challenges. Retailers must understand their responsibilities in collecting and remitting sales tax on transactions where they do not physically handle or possess the goods being sold. This is where tax resale certificates come into play.

A tax resale certificate is a document that allows retailers to make purchases from suppliers without paying sales tax upfront. Instead, retailers provide these certificates as proof that they intend to resell the purchased goods and will collect sales tax from their customers at a later point in time.

What is Drop Shipping?

Dropshipping is a fulfillment method where the selling merchant does not stock or own inventory. When a customer buys a product, the seller purchases the item from a third party. The third party is usually a wholesaler or manufacturer who then ships the product directly to the customer. In dropshipping scenarios, the seller does not handle the product directly. This is a particularly popular form of e-commerce.

Dropshipping Can Make Sales Tax Complicated

Dropshipping is a new and innovative way of doing business. This is very exciting but also comes with unique operational challenges. This is particularly true when it comes to figuring out relatively simple things like sales tax.

In a traditional brick-and-mortar sales environment, sales tax is rather straightforward. Customers are usually making purchases from their stores and the retailer collects the sales tax from these purchases at the checkout. This is all happening in the same state in one location, so there is little confusion.

With drop shipping, the retailer could be in Kansas, while the order is forwarded to a supplier in Delaware and then shipped to a customer in Tennessee. This makes it confusing about who charges the sales tax and to exactly what state sales tax is owed.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

Is The Tax Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

In dropshipping scenarios, when a retailer receives an order from a customer, they transmit that order directly to their supplier who then fulfills it by shipping the product(s) directly to the end consumer. Since the retailer never takes physical possession of the goods being sold, they can utilize a tax resale certificate when purchasing those items from their supplier.

By providing a valid tax resale certificate to their supplier, retailers can avoid paying sales tax on those specific transactions since they are not considered end consumers themselves but rather intermediaries facilitating the sale.

Understanding how tax resale certificates work in dropshipping scenarios is crucial for both retailers and suppliers alike. Retailers must ensure they have proper documentation in place and adhere to relevant state and local tax laws. Suppliers must also verify the validity of the tax resale certificates they receive to avoid potential liabilities.

In the following sections, we will delve deeper into the intricacies of tax resale certificates and explore best practices for retailers and suppliers when it comes to navigating sales tax obligations in drop-shipping arrangements. By gaining a comprehensive understanding of these concepts, businesses can confidently navigate the evolving e-commerce landscape while ensuring compliance with sales tax regulations.

The Various State Tax Laws Can Be Confusing

Dropshippers must understand that each state has its unique tax laws related to retail sales tax that are constantly changing. There are many different definitions of what is nexus and what manner of tax resale certificates are acceptable. Some states accept resale documentation from other states, while many do not.

Third-party fulfillment companies make this even more difficult to comprehend.  A large company like Amazon can have one shipment travel through a dozen states, which can often trigger nexus.

Do Not Be Caught Unaware

Many dropshipping third-party suppliers are being unpleasantly surprised by large fines and hefty audits. This has made them require retailers to pay sales tax or be able to present valid tax resale certificates. However, the type of documentation required for each state can vary greatly.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Small businesses are an important part of the economy and have a significant impact on their local communities. As such, they need to be aware of the various tax regulations that apply to them. Knowing the right tax advice for small businesses can help them save money and ensure compliance with all applicable laws. This article will discuss the different types of taxes that small businesses must pay, as well as provide tips on how to maximize deductions and take advantage of available credits. It will also cover some common mistakes made by small business owners when it comes to filing taxes so that readers can avoid making costly errors.

Being An Entrepreneur Is Hard Work

No doubt, being a successful entrepreneur will require hard work and dedication. However, the younger generations are no strangers to working several jobs and/or side hustles and still barely making enough money to pay the bills. This is not a comfortable life and will quickly wear anyone down. Comparatively, you will work hard in your own business, but it will feel much more worthwhile. The money will be much more satisfying, and you will be motivated and challenged in a new way.

There is no greater joy than owning and operating your own business. You look over your record-keeping and have a sense of well-deserved pride in your accomplishments of the past year. Then you remember tax season is looming over you like a dark shadow and a knot of worry forms in the pit of your stomach.

It Is Never Too Early To Plan For Taxes

2020 was indeed a year that had a lot of personal challenges for small businesses. However, understanding your tax liability for the coming year is always a good idea and it is never too early to start. There is no reason that taxes need to be a mystery, and you can forecast what you will owe in the coming year.

There Are Other Taxes Besides Income Taxes

Businesses pay more than just income taxes. They include the following:

• Employment taxes on wages paid to employees and to the owner (you). 
• Social Security
• Medicare tax 
• Federal unemployment tax (FUTA)

Social Security tax is 12.4 percent of all wages paid up to $137,700, with half paid by the employee and half paid by the employer. Medicare is equal to 2.9 percent of wages paid (3.8% on wages over $200,000 ($250,000 for joint returns, $125,000 for married taxpayers filing a separate return), half paid by the employee, and half paid by the employer. FUTA is generally equal to 6 percent of the first $7,000 of each employee’s wages and is paid by the employer. Self Employed owners will have to pay a total amount of Social Security taxes and Medicare taxes since there is no separate employer to pay it for you.

Business Organization

Are you sure that you have chosen the proper business organization? The type of organization has a strong bearing on your tax structure, and you should make sure your organization utilizes the best tax structure for your business needs. Having a small business tax professional look over the Consumer Price Index is a good way to understand your business should be properly structured.

Independent Contractors

Are you confident that your independent contractors have not become employees during the tax year? Did you provide them with the right forms? Businesses need to understand how to properly document all those who have done work for them. The Internal Revenue Service or IRS regulations on such matters can be very perplexing.

Documenting Yourself

Have you, the owner, been taking money out of business to pay personal or professional expenses?

Do you know what to call the money you have taken out? Are you drawing a salary?

Small business accounting can be quite complex and confusing. The wrong guess to any of these tough questions can land you a lot of trouble with the IRS. This is why having the proper small business consultant is crucial to protecting your business from unnecessary taxes and fines.

Never Underestimate Taxes

Tax planning is an important part of running a successful small business. By understanding the tax laws and regulations, you can ensure that your business is operating within the law and taking advantage of all available deductions. As a small business owner, it’s important to stay up-to-date on the latest tax laws and advice to ensure that you are taking full advantage of all available deductions. This article will provide some helpful tips for small businesses when it comes to tax advice.

Small businesses often face a wide range of tax-related issues that can be difficult to navigate. With the right tax advice, however, small business owners can ensure they are compliant with all relevant tax regulations and maximize their profits. This article will discuss the key considerations for small businesses when it comes to taxes and provide advice on how to make sure you are taking advantage of all available deductions and credits.

Tax Implications Can Have Brutal Consequences

It is important to understand the tax implications of your business decisions. Knowing the basics of small business taxation can help you make informed decisions that can save you money and time in the long run. This article will provide an overview of some key tax advice for small businesses, including how to maximize deductions, filing deadlines, and more. With this knowledge, you can ensure that your taxes are properly taken care of and that your business is running as efficiently as possible.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Small businesses often face a lot of financial pressure when it comes to taxes. With the right strategies, however, small businesses can significantly reduce their tax burden and free up valuable resources. In this article, we will explore some of the best ways for small businesses to reduce their tax burden and maximize their profits. We will look at how to take advantage of deductions and credits available to small business owners, as well as other strategies such as deferring income or investing in retirement plans. By taking the time to understand the different options available, small business owners can make sure that they are not overpaying taxes and instead use those resources for more productive activities.

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels, and a platform like Amazon.

Business Travel Expenses

The Internal Revenue Service defines a business expense as the ordinary and necessary expenses associated with traveling away from your home for your business, profession, or job. These expenses cannot be extravagant or used for personal purposes.

The following are valid business expenses:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

Small Businesses Are Important

Small businesses are the backbone of the economy and often face a heavy tax burden. Fortunately, there are several strategies available to small business owners to reduce their tax burden. By taking advantage of various deductions, credits, and other incentives, small businesses can lower their overall tax liability. Additionally, they can use effective financial planning strategies to manage their taxes more efficiently. With the right guidance, small business owners can ensure that they are paying only what is necessary in taxes and maximizing their profits.

Remember The Deductions

Small businesses can take advantage of the various tax deductions and credits available to them. By understanding the different types of deductions and credits, small business owners can maximize their savings and minimize their taxes. Additionally, by staying organized and keeping accurate records, small businesses can ensure that they are taking full advantage of all the deductions and credits they are eligible for. With the help of a qualified accountant or tax professional, small businesses can ensure that they are taking full advantage of all available opportunities to reduce their tax burden.

Home Office Expenses

Using part of your home for business allows you to deduct expenses for the business use of your home. This can be applied to all types of homes including business owners who rent.

If you use your home exclusively and regularly for conducting business you can deduct the following:

• Mortgage Interest
• Insurance

To qualify for the home office deduction, you must show that your home is used regularly and exclusively for conducting business and is the principal place of business.

There are two methods for calculating the house office deduction. In the standard method, you use Form 8829 to itemize the expenses involved in using and maintaining your home office. This includes rent or mortgage interest payments, utilities, homeowners insurance premiums, and property taxes. In the simplified method, you determine the square footage of your home office (up to 300 square feet) and multiply by five dollars.

The simplified method is more straightforward, but you should see which one gives you a larger deduction amount.

For small businesses, reducing their tax burden is an important part of staying competitive and profitable. There are a number of ways that small businesses can reduce their tax burden, from taking advantage of deductions and credits to structuring their business in the most tax-efficient way possible. By understanding the different strategies available to them, small business owners can save money on taxes while still complying with the law.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

A tax resale certificate can save you money on taxes if you start a business.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies used in products you will resell, such as wood for a cabinet.

However, the process can be difficult, and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can ensure you get all the advantages of a tax resale certificate without dealing with the hassle of government red tape. Let us handle the hard stuff so you can run your business confidently. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

As a small business owner, taxes can be one of the most important and challenging aspects of running your business. Planning for taxes is essential to ensure you are compliant with all applicable laws and regulations, as well as to maximize your tax savings. With the right planning, small businesses can make sure their tax burden is minimized and that they are taking advantage of all available deductions. In this article, we will discuss how small businesses should plan for taxes in order to stay compliant and maximize their savings.

Remember The Deductions

Tax planning can help you maximize your deductions, minimize your tax liability, and ensure that you are in compliance with the law. By understanding the tax implications of your decisions and taking advantage of tax deductions and credits available to small businesses, you can save money and reduce your overall tax burden. In this article, we will discuss some strategies that small businesses should consider when planning for taxes.

Do Not Be Scared

Taxes can be a major challenge for small businesses, especially when it comes to planning for the future. As a small business owner, it is important to understand the tax laws and regulations so that you can plan ahead and make sure that you are compliant with the law. With proper planning, you can minimize your tax liabilities and maximize your profits.

By understanding how taxes work and what deductions are available to you, small businesses can plan ahead and ensure they are taking advantage of all available deductions. Additionally, they should stay up-to-date on any new tax laws or changes that might affect their business. With proper planning, small businesses can save money on taxes and use those savings to reinvest in their business.

No One Can Run From Taxes

Taxes are an essential part of running a small business and having the right plan in place is paramount to success. With the right tax planning, small businesses can maximize their profits by minimizing their tax liability. It is important for small business owners to understand how taxes work and what strategies they can use to reduce their tax burden. This article will discuss how small businesses should plan for taxes and provide useful tips on how to make the most of their income.

Tax planning is an essential part of running a successful small business. It can help you to keep more of your hard-earned money and make sure that you are meeting all of your tax obligations. With the right tax planning strategies, small businesses can ensure that they are making the most of their finances and taking advantage of available deductions.

Do Not Wait Till The Last Minute

It is important to plan ahead in order to minimize tax liabilities and maximize profits. Planning for taxes involves understanding the various tax laws, filing deadlines, deductions, credits, and other tax strategies that are available to small business owners. By taking the time to understand the different types of taxes and how they apply to your business, you can ensure that you are paying the correct amount of taxes on time each year. This will also enable you to take advantage of any available deductions or credits that could help reduce your overall tax burden. With careful planning and preparation, small businesses can save money on their taxes while still complying with all applicable regulations.

Planning for taxes is an important part of running a small business. It’s essential to understand the tax implications of your business decisions and plan accordingly. With the right strategy, you can maximize your deductions and minimize your tax liability. This article will discuss how small businesses should plan for taxes, including what taxes need to be paid, how to save money on taxes, and what resources are available to help with tax planning.

This Is Different Than Standard Income Taxes

Small businesses face unique challenges when it comes to taxes. As a business owner, you need to be aware of the different types of taxes you are liable for and plan ahead in order to minimize your tax burden. Planning for taxes can be difficult, especially if you are just starting out or don’t have a lot of experience with finances. However, there are some steps that small business owners can take in order to ensure they are properly prepared for tax season. By understanding different types of taxes, creating a budget, and filing on time, small businesses can plan ahead and save money on their taxes.

Make Sure You Have A Plan

As a small business owner, it is important to have a plan in place for taxes. Knowing your tax obligations and how to prepare for them can help you ensure that you are compliant with the law and minimize your tax burden. In this article, we will discuss how small businesses should plan for taxes, from understanding the different types of taxes to developing strategies to reduce their liability. We will also consider some of the use cases of AI writing tools that can help streamline the process. By understanding and planning ahead, small businesses can make sure they are prepared when it comes time to file their taxes.

That Is Why We Are Here To Help

Understandably, all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemption status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else so they can get back to making the most of running their business.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

Running a small business takes a lot of hard work, dedication, and perseverance. Every expense, no matter how small, adds up and impacts the bottom line. Tax deductions can help alleviate some of the financial pressures small business owners face. They allow you to write off expenses and lower your tax bill. In this blog, we highlight five small business tax deductions that will save you money.

1. Home office deduction

If you run your business from home and have a designated workspace, you may qualify for the home office deduction. You can deduct a portion of your housing expenses such as mortgage interest, property taxes, utilities, and internet bills. The amount you can deduct is based on the percentage of your home that’s used for business purposes. To qualify for this deduction, your home office must be your principal place of business, and you must use it exclusively for work.

2. Business vehicle deductions

If you use a car, truck, or van for business purposes, you can deduct the cost of operating and maintaining it. You have two options for calculating your deduction: the actual expenses method or the standard mileage rate method. With the actual expenses method, you deduct the prorated cost of gas, maintenance, repairs, and insurance that relate to business use. With the standard mileage rate method, you multiply the number of business miles you drove during the year by the IRS’s standard mileage rate.

3. Retirement plan contributions

Small business owners can take advantage of setting up a retirement plan for themselves and their employees. Contributions to retirement plans are tax-deductible, and they reduce your taxable income. There are several retirement plans to choose from, such as a Simplified Employee Pension (SEP) plan, Solo 401(k) plan, or a SIMPLE IRA. Consult with your accountant or financial advisor to determine which plan is best for you.

4. Business equipment and supplies

The cost of purchasing or leasing business equipment and supplies is tax-deductible. This includes office furniture, computers, printers, software, and office supplies such as paper, ink, and toner. You can either deduct the total amount of the purchase in the year you made the purchase or depreciate the cost over several years.

5. Professional fees and memberships

If you’re a member of a professional organization related to your business, or you require professional services such as accounting or legal support, these costs are tax-deductible. You can also deduct dues or subscriptions paid to these organizations. Keep accurate records of these expenses and include them on your tax return.

As a small business owner, you have enough on your plate. It’s easy to overlook tax deductions that can save you money. Keep track of your expenses and consult with a tax professional to see which deductions apply to your business. By taking advantage of the deductions listed in this blog, you can minimize your tax liability and keep more money in your business. Take the time to research and understand which deductions can save you the most money – you’ll be glad you did!

Equipment and Furniture

Section 179 is a tax law that allows business owners to deduct the full purchase price of qualified equipment from their gross income. Rather than deducting a certain percentage of the equipment under a multi-year depreciation schedule, as is customarily done, business owners can deduct the full price, as long as it is under$2.5 million if it was financed or purchased in 2018.

Qualified assets for Section 179 include:

•    Machines or equipment purchased for business use.
•    Office furniture.
•    SUVs, pickups, and vans weighing more than 6,000 pounds.
•    Certain improvements to the interior of commercial property.

Read our handy article Tax Deductions that Every Small Business Owner Should Know to find out about more money-saving tax deductions.

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels, and a platform like Amazon.

Depreciation

If you have a business asset that is expected to last more than one year, you can depreciate the cost of the asset over its life rather than deducting the cost of the asset the year that you purchase it. Depreciation is fully deductible. Examples of assets that can be depreciated are:

• Cars
• Furniture
• Technology like computers
• Improvements to leased property

You can not include inventories, stock-in-trade, and land cannot be as a depreciated tax deduction.

Become Proactive

Business taxes are determined by net income. This is when you subtract business expenses from gross revenues. Having an online accounting system automatically keeps track of your figures. If you use an online accounting system and you’ve entered all income and expenses, the system will automatically provide you with a gross profit figure.  Those that use spreadsheets, please take the time to add up the numbers so you can forecast what you will need to owe in taxes for the following year.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

As a small business owner, you already have a lot on your plate. Your priority may be sales, customer retention, and growth. However, paying attention to the financial and legal aspects of running a business can be a costly mistake. You may not enjoy doing taxes, but understanding small business taxes is critical if you want to avoid penalties, deductions, or audits. In this blog post, we will cover the basics of small business taxes, the types of taxes, tax deductions, and how to stay compliant.

What Is Small Business Tax?

Small business tax is a mandatory payment of a portion of profits or income to the government. The revenue you earn from your business counts as taxable income, and you have to calculate and pay taxes on it. Tax rates vary depending on the type of business structure, revenue, and state. Failing to file taxes or pay them on time can lead to penalties and consequences, such as losing your business license, bank account freezing, or a visit from the IRS.

Types Of small Business Taxes

Small businesses may have to pay different types of federal and state taxes. Federal taxes include income tax, self-employment tax, employment tax, and excise tax. State taxes vary depending on the state but may include state income tax, sales tax, property tax, and franchise tax. Your business structure also impacts your tax liabilities, as sole proprietors, partnerships, LLCs, and corporations have different tax obligations.

Tax Deductions

One way to reduce your small business tax bill is to take advantage of tax deductions. Tax deductions allow you to reduce your taxable income by deducting expenses related to your business. The expenses may include office supplies, software, travel, insurance, marketing, and utilities. Keeping accurate records of your expenses is essential to claim tax deductions. If you work from home, you may also qualify for the home office deduction. Consult with a tax professional to find out which deductions apply to your business.

Staying Compliant

Staying compliant with small business tax rules may feel daunting, but it is necessary to avoid legal and financial issues. To stay compliant, you need to register for an employer identification number (EIN), keep track of your revenue and expenses, file tax returns on time, make estimated tax payments, and be aware of tax updates and changes. You may also benefit from hiring a tax professional or using tax software to make tax filing more manageable.

Small business taxes can be complicated, but they are an essential part of running a successful enterprise. By understanding the basics of small business taxes, you can reduce your tax liability, prevent costly mistakes, and stay compliant with the law. Remember to keep accurate records, take advantage of tax deductions, and consult with a tax professional, if needed. Don’t let small business taxes intimidate you, embrace them as part of your entrepreneurial journey.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this needs to be clarified for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business, there first needs to be nexus. A connection between the state and your business finds Nexus relating to state sales tax. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical reality as the significant requirement for creating nexus. It should be noted that physical presence is considered an essential requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

What Information Do I Need For The Tax Certificate Registration Form?

You must provide the following information:

• The name and address of the purchaser
• The name and address of the seller
• The registration number of the purchaser
• An accurate description of property purchased for resale
• The reason for the exemption
• A statement that if the property is put to use in a taxable manner the purchaser will remit the consumer use tax
• Date Signature and Title of the authorized individual at the purchaser

What Happens If I Do Most Of My Business In A State That I Am Not Incorporated?

If you primarily do business in a state that you are not incorporated in, make sure you apply for a Foreign Qualification (also known in some states as a Certificate of Registration or Certificate of Authority). This is the process of registering your company, which is considered domestic to the state in which it was initially formed and foreign to all other states, as a foreign entity in the conditions in which it operates. The retailer can then legally conduct business outside the state in which the company was initially formed and, therefore, should be able to

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Tax Resale Certificates Are Essential

Having a Tax Resale Certificate is essential for businesses that sell goods or services to other businesses. It helps them to save money on taxes by allowing them to purchase items for resale without paying sales tax. A Tax Resale Certificate can also be used to purchase items from wholesalers and manufacturers at discounted prices. With this certificate, businesses can also claim back any sales tax they have already paid on purchases of goods or services they resold. Having a Tax Resale Certificate is an easy and cost-effective way for businesses to save money and stay compliant with the law.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this needs to be clarified for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business, there first needs to be nexus. A connection between the state and your business finds Nexus relating to state sales tax. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical reality as the significant requirement for creating nexus. It should be noted that physical presence is considered an essential requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

What Information Do I Need For The Tax Certificate Registration Form?

You must provide the following information:

• The name and address of the purchaser
• The name and address of the seller
• The registration number of the purchaser
• An accurate description of property purchased for resale
• The reason for the exemption
• A statement that if the property is put to use in a taxable manner the purchaser will remit the consumer use tax
• Date Signature and Title of the authorized individual at the purchaser

What Happens If I Do Most Of My Business In A State That I Am Not Incorporated?

If you primarily do business in a state that you are not incorporated in, make sure you apply for a Foreign Qualification (also known in some states as a Certificate of Registration or Certificate of Authority). This is the process of registering your company, which is considered domestic to the state in which it was initially formed and foreign to all other states, as a foreign entity in the conditions in which it operates. The retailer can then legally conduct business outside the state in which the company was initially formed and, therefore, should be able to

Taxes Can Be Tricky

A Tax Resale Certificate is an important step in ensuring that you comply with the tax laws of your state. It allows you to purchase items from a wholesaler or manufacturer without paying sales tax, and then resell those items to customers. This can help businesses save money on taxes, as well as provide an extra layer of protection against audit scrutiny. With the right Tax Resale Certificate, you can make sure that your business is following all applicable tax laws and regulations, and ensure that you are not overpaying taxes unnecessarily.

Businesses Do Not Want To Be Unprepared

Obtaining is an important step for any business that sells goods or services. It allows companies to collect sales tax from customers and remit it to the state, which protects them from potential penalties. Additionally, having a Tax Resale Certificate can make it easier for businesses to track their sales tax obligations and ensure that they are compliant with all applicable laws. Furthermore, having a Tax Resale Certificate may even provide businesses with specific discounts on their purchases of taxable goods and services. Getting a Tax Resale Certificate is an important step in helping businesses stay organized and compliant while also potentially saving money on taxes.

All The States Have Different Laws

A Tax Resale Certificate is a document that allows businesses to purchase goods and services without paying sales tax. This certificate is especially important for businesses that operate in multiple states, as it can help them save money on taxes. Having a Tax Resale Certificate also helps businesses comply with their state’s tax laws, which can help them avoid fines and penalties. Additionally, having a Tax Resale Certificate can make it easier for businesses to purchase goods and services from other states, as they don’t have to worry about filing multiple returns or dealing with different tax rates. In short, having a Tax Resale Certificate is an essential part of running a successful business.

That Is Why We Are Here To Help

Understandably, all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemption status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else so they can get back to making the most of running their business.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

What Information Do I Need For The Tax Certificate Registration Form?

You must provide the following information:

• The name and address of the purchaser
• The name and address of the seller
• The registration number of the purchaser
• An accurate description of property purchased for resale
• The reason for the exemption
• A statement that if the property is put to use in a taxable manner that the purchaser will remit the consumer use tax
• Date Signature and Title of the authorized individual at the purchaser

Small Businesses Should Never Underestimate Taxes

The Internal Revenue Service has been more active in targeting small businesses for tax audits in the last several years. New businesses have spent 2.5 billion each year preparing taxes and answering questions from the IRS about tax return inquiries.

However, there are things that any new business can do to lessen its tax burden. We will discuss how choosing the right business entity can make your life as a new entrepreneur much easier in the coming future.

Business Structure

One of the most important things you can do is be aware of the different types of legal structures that exist and how that affects your overall tax and liability burden. You should be fully aware of the different types of business entities and what that means for your business.

What is a business entity?

One or more natural persons create a business entity to carry on a trade or business. Business owners often favor corporations and LLCs because they offer several layers of protection for their owners.

The following are types of business entities:

• Limited liability company: A registered business with limited liability for all members
• Professional limited liability company: An LLC structure for professionals, such as doctors and accountants
• C-corporation: An incorporated business composed of shareholders, directors, and officers
• S-corporation: An incorporated business that is taxed as a pass-through entity
• Professional Corporation: A corporate structure for professionals, such as doctors and accountants
• B-corporation: A for-profit corporation that is certified for meeting social and environmental standards
• Nonprofit: Corporations: Formed primarily to benefit the public interest rather than earn a profit.

Decide what state you want to form your business.

Most new online business retailers file their documents within the state where they are physically located. This helps avoid the cost of hiring an out-of-state registered agent in your home state. However, if your business is large in scope, you might want to file your documents in Delaware. This state has advantages like laws that are generally favorable to businesses, and, unlike other states, it has a separate Court of Chancery that hears cases involving corporate law. It also does not collect corporate taxes if your Delaware Corporation actually does business in another state.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business, there first needs to be a nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business’s physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

What Are The Different Methods In Which The States Establish Sales Tax Nexus?

The definition of sales nexus can vary greatly from state to state. Here is a list of the different ways in which states can determine sales tax nexus:

• Click-Through Nexus legislation
• Affiliate Nexus legislation
• Marketplace Nexus legislation
• Notice and Reporting Requirements
• Economic Nexus 

Click-Through Nexus legislation- This usually requires a remote seller to meet a minimum sales requirement in the state resulting from an in-state referral agent who is a resident of the state. The agent must make commission payments to the referral agent for any sales that are the result of the click-through referrals from the agent’s website. 

Affiliate Nexus legislation– A remote retailer holds a substantial interest or is owned by a retailer that is located within the state and sells a similar type of product under a similar business name. Instate retailers can also promote or market the product to in-state customers. Affiliate nexus does not require common ownership and may not include services such as sales and delivery.

Marketplace Nexus legislation– This definition applies to marketplace facilitators who operate a business in the state and provide e-commerce infrastructure, customer service, payment processing, and marketing services to individual sellers. The facilitator is the one that is required to register with the state and collect the sales tax rather than the individual sellers.

Notice and Reporting Requirements– This legislation requires that a retailer does not collect the state sales tax themselves but notify their buyers that they must report state use tax on all their purchases. The retailer might be required to send the purchaser a statement of all their purchases.

Economic Nexus– An out-of-state retailer generally must collect and remit sales tax once the retailer meets a set level of sales transactions or gross receipts activity (a threshold) within the state. No physical presence is required.

To find out more about state sales tax, please visit the sales tax institute.

What is A Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

Economic Hardship Often Spurs Innovation

Many amazing companies like Uber, Square, and Instagram were birthed in the last recession. Hardship often leads to amazing innovation. It will not be surprising if we see many innovative companies coming out on the heels of this pandemic. Think about how many talented people have been furloughed and now have the time to devote their energies elsewhere. Millennials and Gen Z have shown that they are generations that embrace the challenges of being an entrepreneur.

Job Security No Longer Exists.

Many people think that starting a business is just too risky. However, the workforce no longer offers the security it once did. Companies do not take care of employees for a lifetime and then provide them with a large pension for retirement as they did a generation ago. People are often replaced and those who switch employers regularly actually make more money. There is a sense that there is no longer any loyalty on the part of employers or employees. This type of environment actually makes starting your business not seem so risky.

What is A Tax Resale Certificate?

You must understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states call them exemption certificates or reseller’s permits.

How Do I Know If I Need To Pay Sales Tax In A Given State?

To establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes in the way business is conducted in modern times.

Traditionally, the nexus has been established by the business having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

Do All States Charge Sales tax?

There are also states that do not charge sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge sales tax on a state level. Alaska and Montana do allow municipalities to charge sales tax on retail goods at a local level. A tax retail certificate is not needed in these places with regard to a state sales tax.

Is The Tax Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

What If A Customer Presents Me With A Tax Resale Certificate? 

A customer can also present a tax resale certificate to you as a retailer and it is your discretion whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

What Happens If I Do Most Of My Business In A State That I Am Not Incorporated?

If you primarily do business in a state that you are not incorporated in, make sure you apply for a Foreign Qualification (also known in some states as a Certificate of Registration or Certificate of Authority). This is the process of registering your company, which is considered domestic to the state in which it was originally formed and foreign to all other states, as a foreign entity in the states in which it operates. The retailer is then able to legally conduct business outside the state in which the company was originally formed and, therefore should be able to apply for a tax resale certificate. 

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Running a small business takes a lot of hard work, dedication, and perseverance. Every expense, no matter how small, adds up and impacts the bottom line. Tax deductions can help alleviate some of the financial pressures small business owners face. They allow you to write off expenses and lower your tax bill. In this blog, we highlight five small business tax deductions that will save you money.

1. Home office deduction

If you run your business from home and have a designated workspace, you may qualify for the home office deduction. You can deduct a portion of your housing expenses such as mortgage interest, property taxes, utilities, and internet bills. The amount you can deduct is based on the percentage of your home that’s used for business purposes. To qualify for this deduction, your home office must be your principal place of business, and you must use it exclusively for work.

2. Business vehicle deductions

If you use a car, truck, or van for business purposes, you can deduct the cost of operating and maintaining it. You have two options for calculating your deduction: the actual expenses method or the standard mileage rate method. With the actual expenses method, you deduct the prorated cost of gas, maintenance, repairs, and insurance that relate to business use. With the standard mileage rate method, you multiply the number of business miles you drove during the year by the IRS’s standard mileage rate.

3. Retirement plan contributions

Small business owners can take advantage of setting up a retirement plan for themselves and their employees. Contributions to retirement plans are tax-deductible, and they reduce your taxable income. There are several retirement plans to choose from, such as a Simplified Employee Pension (SEP) plan, Solo 401(k) plan, or a SIMPLE IRA. Consult with your accountant or financial advisor to determine which plan is best for you.

4. Business equipment and supplies

The cost of purchasing or leasing business equipment and supplies is tax-deductible. This includes office furniture, computers, printers, software, and office supplies such as paper, ink, and toner. You can either deduct the total amount of the purchase in the year you made the purchase or depreciate the cost over several years.

5. Professional fees and memberships

If you’re a member of a professional organization related to your business, or you require professional services such as accounting or legal support, these costs are tax-deductible. You can also deduct dues or subscriptions paid to these organizations. Keep accurate records of these expenses and include them on your tax return.

As a small business owner, you have enough on your plate. It’s easy to overlook tax deductions that can save you money. Keep track of your expenses and consult with a tax professional to see which deductions apply to your business. By taking advantage of the deductions listed in this blog, you can minimize your tax liability and keep more money in your business. Take the time to research and understand which deductions can save you the most money – you’ll be glad you did!

Equipment and Furniture

Section 179 is a tax law that allows business owners to deduct the full purchase price of qualified equipment from their gross income. Rather than deducting a certain percentage of the equipment under a multi-year depreciation schedule, as is customarily done, business owners can deduct the full price, as long as it is under$2.5 million if it was financed or purchased in 2018.

Qualified assets for Section 179 include:

•    Machines or equipment purchased for business use.
•    Office furniture.
•    SUVs, pickups, and vans weighing more than 6,000 pounds.
•    Certain improvements to the interior of commercial property.

Read our handy article Tax Deductions that Every Small Business Owner Should Know to find out about more money-saving tax deductions.

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels, and a platform like Amazon.

Depreciation

If you have a business asset that is expected to last more than one year, you can depreciate the cost of the asset over its life rather than deducting the cost of the asset the year that you purchase it. Depreciation is fully deductible. Examples of assets that can be depreciated are:

• Cars
• Furniture
• Technology like computers
• Improvements to leased property

You can not include inventories, stock-in-trade, and land cannot be as a depreciated tax deduction.

Become Proactive

Business taxes are determined by net income. This is when you subtract business expenses from gross revenues. Having an online accounting system automatically keeps track of your figures. If you use an online accounting system and you’ve entered all income and expenses, the system will automatically provide you with a gross profit figure.  Those that use spreadsheets, please take the time to add up the numbers so you can forecast what you will need to owe in taxes for the following year.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.