State and local taxes can be every bit as complicated as federal income taxes. This is true for businesses and individuals alike. That said, there are some things you can do to make calculating state and local taxes and identifying your nexus liability easier. This article will provide some helpful pointers that will make processing state and local taxes a lot easier and less painful. If you are looking to learn more about Ohio state and local taxes, read further.
Make Sure That Your Employee Information Is Up To Date
It is not uncommon for people to move from state to state, even within the same year. This is especially true for people who live near state borders. And then there are those who move across country and make accommodations to work remotely. As an employer, allowing your employees to work remotely can be a fantastic recruitment tactic. However, if you take this approach, you may find yourself with a tax obligation. Nexus issues aren’t restricted to those who work in other states, there are often reporting issues across local municipalities and all of them could potentially impact your tax liability. It’s important to have updated address information for all employees. Furthermore, if you don’t know how different communities handle taxes, get some help.
Know Your State’s Return Schedule
The return schedule for states is different than federal tax returns, and the return schedule for one state is likely different than that of another. Knowing your state’s return schedule will give you an idea of when you should expect your state tax return. You should also know that different states have different options for filing and receiving tax returns. This is why it is a good idea to check your state’s rules and regulations regarding tax returns.
Know Your State’s Tax Laws
The tax code in one state is likely very different from the tax code in another. For example, the allocation and apportionment rules vary widely from state to state. Not knowing how your state handles allocation vs. apportionment can lead to many costly fines. Different states – and localities – also have different regulations concerning sales and use taxes. For instance, in some places bottled water might be taxed as food, but not in others. If this sounds very confusing, it’s because it is!
Avoid Double Payment
Many businesses that operate in multiple states will wind up double paying on their state taxes, paying too much to one state, too little to another or all of the above. This is something that you definitely want to be mindful of if you own a business that does business in multiple states.
Call In The Professionals
All of this is, of course, very convoluted. This is why we recommend that you hire an accounting firm that specializes in providing state and local tax services. Your state and local tax team should be able to help you make sense of state tax regulations, while also helping you maximize state credits and avoid double payment.