There are countless things that we have to figure out before and while running a business. Many people find it’s difficult and even take months to put the perfect name for a company. Business sounds complicated and it is, if we make it so. See, most of the businesses that we know as a brand today are the last name of the founder (names should not be the complex thing for you). Business can be easy, from naming to operating day to day, everything will be trouble free with some knowledge, experience and with the support of dedicated staff.
As I mentioned before there are numerous things to consider while running a business. You need to first find a way to register your company, rent office space, hire employees, pay tax to the government and more. Running a company needs management in every corner and sector. Being prepared for every situation will help you to be resilient and strong.
In this article, we will like to give you some information about the sales tax that you will need while running a business. Use this information as a direction and seek professional help while filing the sales tax.
When do you have to pay sales tax?
People are running various kinds of businesses. Some involve a company making products for other companies or a business who has its own inventory. Sales tax is charged to the end user of your service. Imagine you make products for other companies and they do the marketing to sell the product: In this scenario, you don’t have to pay the sales tax cause you haven’t sold the product to the customers. It’s done by another company and they will add percent of sales tax on the product while making the sale.
But if your company is the one who hands over the product to the customer by making the sale then you will comply to pay sales tax to the government. If your company is located in different states and selling the server to end consumers, you will have to collect sales tax nexus. Running an international business is more complex because the different tax systems of countries have to be considered and need to be cleared.
Understanding sales tax nexus as a beginner.
Nexus simply means network. So when you have your business in various locations you are creating a nexus for your business. This is why you will have to know about the sales tax nexus. Here is another case; if you have a partner organization who works as an affiliate or a staff in another location (country) who works from there even without an official workplace, you will comply to pay sales tax.
Today things are more digital and customers prefer to buy online. With the power of the internet your business might sell products to the clients living all around the world. Even if you have your business headquarter in one specific state but selling products to worldwide customers, you are required to collect sales tax from those clients as well.
Sujan Pariyar is the founder of Think 7 Figures magazine.