As a business owner , expanding your sales activity beyond your home state is an exciting growth opportunity . However , as your cross-state sales activity increases , so does your state and local tax compliance . While you might have your income and sales tax filings covered , many businesses often overlook gross receipts tax filings .
Gross receipts taxes have been around for many years now as a source to support and increase revenues within a respective state or local jurisdiction . And with many of these jurisdictions seeking ways to generate revenue , especially in today ’ s economic environment , governments are on the lookout for companies who aren ’ t filing these taxes .
IS YOUR COMPANY ’ S CROSS-STATE SALES ACTIVITY TRIGGERING GROSS RECEIPTS TAXES ?
By Elizabeth Potocki , CPA Tax Shareholder
As a business owner , expanding your sales activity beyond your home state is an exciting growth opportunity . However , as your cross-state sales activity increases , so does your state and local tax compliance . While you might have your income and sales tax filings covered , many businesses often overlook gross receipts tax filings .
Gross receipts taxes have been around for many years now as a source to support and increase revenues within a respective state or local jurisdiction . And with many of these jurisdictions seeking ways to generate revenue , especially in today ’ s economic environment , governments are on the lookout for companies who aren ’ t filing these taxes .
UNDERSTANDING GROSS RECEIPTS TAXES Gross receipts taxes are based on your sales receipts to a particular jurisdiction . Typically , there are little or no deductions for things like discounts , cost of goods sold or operating expenses . It ’ s strictly the total amount of revenue your business collects in a tax period , whether you are generating overall income or losses . For example , if your business collects $ 1 million in revenue in 2023 , and that state imposes a . 26 % tax rate on it , you must pay $ 2,600 to the state .
The due date for these taxes varies within each state – they could be due monthly , quarterly or annually . It ’ s important to be aware of your sales activity and understand how it impacts when your taxes are due .
16 VIEWpoint Issue 2 | 2023