You may be excited to grow your business, but while expansion comes with a whole host of new opportunities, it also comes with plenty of new responsibilities, particularly in terms of taxes.
Whether you’re opening another store, taking on more employees, or bringing your products to customers in other states, expanding your business can become complicated and stressful if you’re not properly prepared.
Working closely with tax services in Coral Gables is the most effective way to ensure that when your business grows, you’re ready for the challenge.
Here are six important things to consider when it comes to your taxes:
- You must get to grips with local and state tax regulations
If expansion means dealing with a new city or state, there are likely to be new tax regulations you’ll need to adhere to that are related to income tax, sales tax, and payroll tax. Every state has its own set of rules and requirements as well as deadlines, and you may need to register for a new tax ID, or update your payroll system in accordance with differing tax rates for each state. A tax professional can help you deal with this.
2. Payroll may become more complex
If you’re adding new employees to your workforce – particularly if they’re in multiple locations – you can expect payroll to become more complex, with different minimum wage requirements, new rules pertaining to overtime, and obligations that may vary when it comes to payroll taxes.
3. You may create a sales tax nexus
A legal connection involving sales tax, selling your products in new states may mean that you’ve created what is known as a ‘sales tax nexus.’ This new connection requires that you collect and remit sales taxes in the state you are selling to, and can be applicable to both bricks and mortar stores and eCommerce. To avoid missing collections or incurring penalties, you must keep a close eye on customer locations and monitor where nexus may be triggered by your activities.
4. It might be worth reevaluating your business structure
Expansion can present an opportunity to review your existing business structure, and check that it still makes sense. By working with a tax professional, you can check whether you’re still getting enough liability protection, whether your tax planning strategy needs to be more sophisticated in order to save you money and protect your business as it grows.
5. Your recordkeeping system may need bolstering
With more invoices, contracts, tax filings and payroll records to deal with as your business grows, managing those records appropriately becomes increasingly important. Whether your records are physical, digital or a combination of both, a robust system for keeping them will help during tax season, provide you with backup during an audit, and support your financial planning into the future.
Accounting software or working closely with accounting and tax service providers, can help ensure that nothing slips through the cracks.
6. Working with professionals could be helpful
Expansion can be a hectic time for any business owner, but having the burden of managing your finances and taxes on top of it all, can prove too much for many. That’s why an accounting firm in Miami can be an extremely worthwhile investment. They’ll help you deal with compliance across different states, apply deductions and credits that you might not have known you were eligible for, and formulate a long-term tax strategy that will support your business as it grows.
Keep these 6 points in mind when expanding your business – while also working closely with a tax professional – and there’s no reason why you can’t enjoy all of the success that should come with growth, instead of all the headaches, sweat and tears.