Small Business Tips 6
As a small business owner it is your responsibility to understand the sales tax laws that apply to your business. Failure to properly collect or report sales tax could result in fines or prosecution. The following information will help you understand the general policies that govern sales tax. Contact your LegalShield provider law firm if you have questions or need additional information on the laws that apply to your business.
- Generally, you only need to collect sales taxes in states where your business has a physical location. A warehouse, fulfillment center, employees and office space (including a home based office) may all be considered a physical presence in a state. If you ship an item to a customer in a state where you do not have a physical presence you are generally not responsible for collecting sales tax.
- State and local governments regulate sales tax. This can be particularly confusing for businesses operating in multiple states or localities. Some states, like Delaware, require no sales taxes, while other states have tax rates ranging from 4% to 8.75%.
- Some states require you to obtain a permit before collecting sales tax. Collecting sales tax without a permit in those states could land you in hot water. The Small Business Administration offers a useful list of state specific tax links. Carefully review the information for the states where your business is located.
- In addition to state sales tax, some municipal governments require sales tax. Municipal sales tax laws may be applied to specific kinds of businesses like restaurants and bars. It is important to know the tax laws in any localities where your business has a physical location.
- There are some general exemptions to sales tax. Non-profit organizations do not need to pay sales tax. Retailers must track sales to non-profits and obtain verification of their tax exempt status. Wholesale purchases, items bought in bulk to be resold, are generally exempt from sales tax. Raw materials that will be used in manufacturing are also generally exempt from sales tax.
- It is important to keep thorough records of your sales and tax collections. Most states and localities require you turn over the taxes you collect monthly or quarterly. You will generally need to file a special return reporting the taxes you collected and all of your sales, including sales that were not taxed.
- Some states offer sales tax holidays where consumers are not charged a sales tax. Exemptions may be general or specific. It is important to check with the state about the specific details of their tax holiday. You will still need to accurately record sales during a tax holiday. Municipal sales taxes may not be exempt during the tax holiday period.
Many small businesses forgo disaster preparation because they believe it is unnecessary, time consuming or too expensive. The truth is, no business can afford to put off developing a disaster plan. Even basic disaster planning could mean the difference between the recovery and failure of your business. These tips are designed to help you get through a disaster and plan a path to recovery. If you need assistance preparing for or recovering from a disaster call your LegalShield provider law firm.
- Every business should have a written emergency response and business recovery plan. During and in the aftermath of a disaster it can be difficult to think clearly and make decisions. Even if you are a sole proprietor, having a plan will help you know where to start, who to contact and how to proceed. Your plan should include:
- instructions for communicating with and keeping customers and employees safe;
- designations for who will handle specific tasks, such as technology recovery and contacting your insurance company;
- contact and policy information for your insurance;
- contact information for important clients and vendors; and
- a staging schedule for bringing your business back online.
- You should review and revise your plan each year or whenever your business undergoes a major change. An outdated disaster plan will cause more confusion and will delay the recovery process.
- Train employees on your disaster plan and distribute copies to all vital employees. Everyone in your business should understand their role in the event of a disaster. Train all new employees and periodically review procedures with existing staff.
- Review your business insurance. Not all business insurance covers natural disasters and some types of coverage can be prohibitively expensive. It is important to consider the needs of your business and the likelihood of a disaster affecting your business.
- Review your lease and talk to your landlord. If your business rents office or retail space it is important to understand the responsibilities of the landlord and their plan for recovering from a disaster.
- Talk to your vendors. Without key vendors many businesses would quickly sink. You should keep an open line of communication with your vendors and understand their own disaster recovery plan.
- Back up your business data. Offsite computer backup and storage is now more affordable than ever. Make sure all of your vital data is recoverable in the event of a disaster. Keeping your data in only one location is asking for trouble. Offsite cloud backup allows you to easily retrieve your data if your main office or data storage is destroyed.
- Make sure you have access to the necessary capital to recover. Many businesses fail after a disaster because they do not have the money to make it through even a brief shutdown. If your business needs assistance after a disaster you may be eligible for a short term, low-interest business recovery loan. Talk to your LegalShield provider law firm to find out more about the options available to your business.
The Federal Trade Commission (FTC) is tasked with preventing fraud, deceptive advertising and anticompetitive business practices that are unfair to consumers. It is important to understand the basic rules of fair advertising and avoid FTC investigation by following the regulations that pertain to your industry. If you have questions call your LegalShield provider law firm and speak with an attorney.
- The information contained in your advertising must be true and cannot be deceptive. A deceptive ad can contain untrue information or omit information, which misleads the consumer. Ads must also be fair, which means they may not cause significant injury to the consumer, violate public policy or be unethical.
- If you make any specific claims about a product or service you must have evidence to back up your claim. The FTC pays particularly close attention to claims made in advertisements that would be difficult for consumers to verify without specific proof. These include claims about health and safety, improved fuel efficiency and energy savings.
- Your website and online advertisements are subject to truth-in-advertising rules. Due to the size and scope of the internet, it is difficult for the FTC to enforce many online advertising rules. This does not mean you should not comply with rules, as you may still be subject to state, local and civil legal action. To learn more about the FTC’s regulation of online advertising visit their website.
- Even if your website or advertisements are created by an agency, you are still responsible for their content. It is important to review any ads created for your business. The FTC will not review ads on your behalf. If you need assistance reviewing an advertisement you may contact your LegalShield provider law firm.
- While the FTC has jurisdiction over most advertising, it generally focuses on national advertising campaigns that may potentially cause the greatest risk of injury to consumers. Injury may be financial or health and safety related. State and local government agencies, or even private consumer protection groups like the Better Business Bureau, are often able to work more quickly to resolve local or individual disputes.
- Telemarketers too must adhere to truth-in-advertising rules. The FTC requires telemarketers to make specific disclosures to consumers during calls. To learn more on the Telemarketing Sales Rules visit the FTC website.
- Certain industries are regulated by agencies other than the FTC. These include airlines, financial services, insurance and others. It is important to understand the rules that govern your industry. If you need assistance contact your LegalShield provider law firm.