Automate Your Sales Operations for Non-Profit Organizations

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Hello, and welcome to another rendition of  Monday Money Moments with myself, your host,   Dana Miller from Executive Financial Insights. This week's topic is on sales tax. And you have   to be saying to yourself, we're a nonprofit. Why  do we pay sales tax? That doesn't make sense.   And that's normally true. Nonprofits  don't pay income taxes. However,   if you are selling t-shirts or things  at a museum gift shop, you do need to   collect and remit sales tax. So understand  that most states have sales taxes. There are   46 states that do, there are four that do not:  Oregon, Delaware, Montana, and New Hampshire.   Of the remaining 46 states that do have sales  taxes and Washington DC, there are 11,000   taxing jurisdictions. What does that mean to  you? That means complexity, lots of rules,   lots of things to pay attention to. And  the rules are different in every state.   Here in the state of Colorado, we have a state  sales tax. We also have local sales taxes. And   then we have what's called home rule taxes where  we can file our local taxes through the state.   The state collects it all and then remits  it to our local municipalities. However,   little bit of complexity here, every single  county and even cities have their own sales taxes.   So wherever you are living, you need to make  sure you are aware of what those rules are.   And what if you sell things online? Then  there's a whole production that goes with that.   There's something that's called nexus rule.  And nexus is basically rules about who owes   taxes to where. And that rules are different,  of course, in each place. Now some of those   rules might mean if you have an employee in a  particular state, that may constitute nexus,   meaning that you have jurisdiction in that state  and therefore you pay sales tax in that state.,   If you ship to a state, you may be paying  sales tax in that state. If you manufacture   in that state or you have a distribution  warehouse in that state, you may have nexus.   Now do note that a few years ago, there  was something I believe it was in South   Dakota called the Wayfair rule and it went to the  Supreme Court. And essentially, yes, we all have   to pay sales taxes, but states are lowering their  threshold for what constitutes a taxable item and   taxable amounts. And so some states are saying  anything, any sales less than $100,000 would not   require sales tax payments on those sales. Again, each state is different.   So if you are going to take on sales  taxes yourself, there are six basic   rules for just sales tax compliance. First thing you need to know, where do you   have next? What states might you have nexus in. Second, figure out if your products are taxable,   some products are not considered taxable. Some  states don't collect sales tax on essential   food products or diapers or baby formula  or such things that other states do.   If you figure out where you have nexus, then  you have to register for sales tax permits,   not only in the state, but possibly in the  counties or cities where you're operating.   Then you need to put collection systems in  place, figuring out what those rates are and   then putting it into your system so that  you can charge and collect and then turn   around and file and remit those sales taxes. Now, if this seems a little overwhelming, which   it sure can, I understand that, my  recommendation would be because it's   such an administrative burden, but it's also  an important one that needs to be handled   by your organization, I might recommend you  outsource this. This is a good opportunity   for you to have an expert take care of these  details for you and alleviate this burden from   your staff so they can go on and deliver the  services that make your organization great.   I am not endorsing any particular outsource  sales tax outfit. I will give you a couple of   names of some that I have some exposure to, or  familiarity with: the first is Avalara and this   is what they specialize in, is sales taxes.  You might check with your CPA firm. They may do   something like this. You may also check with  another CPA firm called Clifton Larson Allen.   They do sales tax compliance and can help advise  on that. And then another company that is very   up and coming, they've only been around for a few  years, maybe six or seven, and that is called Tax   Jar. So those are just some ideas for you.  And that is your Monday Money Moment.   Thank you. And if you would like to have more  tips and more ideas, please join me on my website,   .executivefinancialinsights.com. Thank you.