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NC Sales and Use Collections on Remote Sales

The North Carolina Department of Revenue issued directive SD-18-6 on 8/7/18 to interpret the North Carolina sales and use tax law as a result of the United States Supreme Court decision in South Dakota v Wayfair.

Remote Sales Subject to Tax

The rules are effective prospectively to sales after October 31, 2018 by remote sellers that do not have a physical presence in North Carolina.  This prospective treatment does not apply to sellers that have a physical presence or other obligation to collect and remit North Carolina sales and use tax.

Remote sellers having gross sales in excess of $100,000 sourced to North Carolina or 200 or more separate transactions in the previous or current calendar year are required to register, collect, and remit sales and use tax effective the later of November 1, 2018 or 60 days after the remote seller meets the threshold.  Remote sellers that do not meet the threshold may voluntarily register with the NCDOR and collect and remit sales and use tax.  Remote sellers may voluntarily begin collecting and remitting sales and use tax any time prior to November 1, 2018.

Engaged in business is defined, in part, as making a remote sale if one of the conditions in G,S, 105-164.8(b) is met, basically if they advertise or solicit business in NC in any way through the media, internet, or distribution of catalogs.

Remote sale is defined as “(a) sale of tangible personal property or digital property ordered by mail, by telephone, via the internet, or by another similar method to a purchaser who is in the State at the time the order is remitted, from a retailer who receives the order in another state and delivers the property or causes it to be delivered to a person in this state.  It is presumed that a resident of this State who remits an order was in this State at the time the order was remitted.”

Remote sellers can register completing an online application through the Streamlined Sales Tax Registration System.

South Dakota v. Wayfair, Inc. Tax Implications

On Thursday June 21, 2018, the Supreme Court issued its much anticipated opinion in the landmark case of South Dakota v. Wayfair, Inc., fundamentally changing the sales tax landscape in the United States.

The Case

South Dakota enacted a law requiring out-of-state sellers to collect and remit sales tax as if the seller had a physical presence in the state. The law only applied to sellers who, on an annual basis, delivered more than $100,000 of goods or services into the state or engaged in more than 200 separate transactions for the delivery of goods or services into the state.

South Dakota sought to enforce the law against Wayfair, Inc. and other online retailers who exceeded the limits of the law. Each of the retailers had no employees in the state and owned no real estate in the state.

Based on prior precedents (National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, and Quill Corp. v. North Dakota, 504 U.S. 29), the lower courts ruled that the law was not enforceable due to the lack of substantial nexus* with the state under the “Physical Presence” test outlined in these cases.  That test allowed states to require retailers to collect and remit sales tax if the retailer had a physical presence (e.g., employees or operating an office) in that state. The mere shipment of goods into the state did not satisfy the physical presence test.

The Result

In a 5-4 verdict, the Supreme Court explicitly overruled the prior cases and held that, while physical presence provided substantial nexus, such nexus also included a certain level of business (delivery of goods or services) conducted within the state.

The Court found that, in this case, the nexus is clearly sufficient based on both the economic and virtual contacts the retailers have with South Dakota. The state law applies only to sellers that deliver more than $100,000 of goods or services into South Dakota or engage in 200 or more separate transactions for the delivery of goods and services into the state on an annual basis.  This quantity of business could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota.  The retailers are large, national companies that undoubtedly maintain an extensive virtual presence.  Thus, the substantial nexus requirement is satisfied.

The Implications

Will you now be required to collect and remit sales taxes in states to which you deliver goods or services?

South Dakota v. Wayfair, Inc. allows all states to enact laws requiring out-of-state sellers to collect and remit sales taxes on sales to customers in that state provided the law applies a safe harbor to those who transact only limited business in the state.  While South Dakota chose an annual $100,000/200 transaction limit that the Court found sufficient, the Court created a level of uncertainty by leaving it up to the states to decide what safe harbors might be sufficient.  We expect we will see a great deal of activity as various states make their statutes consistent with the court’s ruling so nexus can be asserted.  For states that already have similar statutes in place, it is unclear whether they will set a future date for enforcement or take the position that the statute has been enforceable since it was put in place.

*Nexus – When referring to sales tax, means that a company is connected to a state and because of that connection, a company must collect tax, fill out a tax return, and send the collected tax to a state.

Given that sales tax laws are established on a state-by-state basis, all businesses making sales of goods or services to customers in multiple states should evaluate the impact of the Court’s holding. 

This ruling is just the beginning of the process and over the coming months we will be monitoring which states are adopting these types of nexus rules and when they will become effective. If you would like more information on how this may impact your business, contact us today.

The Tax Deadline Has Come and Gone – Are You Happy?

With April 18th in your rear view mirror it is time to review how your tax preparation went.  Was it a painless process for you?  Did you have constant communication with your accountant?  If you did, you should thank your accountant and start planning for next year!  If not, maybe it is time to start thinking about a change.  Over the years we (as a Firm) have noticed clients switching to CPA Firms of our size over the traditional sole practitioner.  While you may enjoy a personal relationship or believe that it would be inconvenient to make a change to a full service CPA Firm – think again….

When you make a switch to a public accounting firm, you gain resources, a team of CPAs with more robust professional backgrounds, and a one-stop shop for all your personal and business financial needs. Wouldn’t it be nice to have a full suite of services at your fingertips – other then just tax preparation? What happens if you want to outsource your accounting, or maybe buy or sell a business?    A CPA Firm handles the “here and now” AND “the here and far from now” process. With an overarching look into your personal or business situation a good CPA Firm can do so much more for you then you ever imagined.  Here’s a look into how they do it:

The Secret Behind A CPA Firm’s Success

A (good) CPA firm functions as a part of your leadership team.  That’s it – that’s the secret.  Before your anticipation dies down, allow us to ellaborate on that.

They Care About You

When you invest in a CPA Firm, they recognize the engagement as a relationship, not a contact.  CPA’s bind themselves to your business, taking a true interest in your financial past, and expressing genuine desire to improve your financial future.

Why is a passionate CPA so important to your financial future?  Because without a genuine desire to grow, your accounting department is simply going through the motions, paying no mind to long-term effects or future goal fulfillment – that doesn’t exactly increase your bottom line.

They Plan With You

Your current financial team always seems too busy with other tasks to focus on the future.  You want daily deadlines to be met, but you also want to plan for next week, next month, and next year. You know how important planning is, but your team doesn’t seem to view it with the same urgency.

Whether it’s because they lack the time, or they’re just too focused on tasks at hand, your team’s priorities are out of place in your opinion. You need a firm that takes the time (any time and every time) to consult with you, give you valuable feedback, or simply provide financial reassurance. A CPA firm sees past daily duties, making your future their main priority and taking the time to plan for a prosperous one.

They Seek Success For You

A CPA firm is going to share your goals, as well as your motivation for reaching them. Even after your organization has reached its financial goals, your CPA keeps at it – they want to see your success accumulate and reach a firm, unwavering stability. A CPA creates opportunities that lead to constant financial growth and a robust bottom line.

Your current accounting department might be deemed your financial team, but do they really function as your teammates? Are they as invested in your financial future as you are? If not, it’s time to start thinking about investing in a real team – one that cares about you, functions with you, and helps you secure a steady and successful financial future.

Ready to get proactive and reach beyond standard tax preparation?  Click below to learn how a CPA firm can provide insight beyond taxes.

Estate Planning For The Wealthy and Not-So-Wealthy

Estate planning is important for both the wealthy and not-so-wealthy.  Even if your estate is not large enough to require payment of estate taxes at your death (for 2017, the estate tax lifetime exemption amount is $5,490,000), having the proper documents in place at your death can minimize the burden placed on your loved ones.  Consider the following items when devising an estate plan:

Create A Will

This is an important first step in the estate planning process.  Wills help you make sure your wishes are carried out with respect to distribution of property, and if you have minor children, a will can be used to designate a guardian or guardians.

Avoid Probate

Documents can be put into place that will eliminate the need for the costly and time-consuming probate process.  In preparing an estate plan, all assets should be examined to determine the best way to title the property so the assets will be distributed according to your wishes and to minimize the expense of the final distribution of your assets.

Where To Start

Your attorney and wealth management advisors (brokers, bankers, CPA, etc) can assist you in the estate planning process to ensure you have a plan in place that is optimal for you.

Whether you need to devise a new estate plan or update an existing plan, having the proper documents in place is the key to providing peace of mind for you and your family. Contact us today to learn more!

So You Want to Franchise Your Business?

Business owners looking for creative ways to grow and expand sometimes turn to franchising in order to accomplish their goals. Franchising occurs when the original owner of a business sells territorial rights to run independently-owned versions of the existing business. The independent business owners are franchisees. While the concept is not for everybody, there are certainly advantages to this business model.

Best practices to consider prior to franchising your business include the following:
Answering the Following Questions

Is my business even franchise-able? This is very important as not every business is. Is there even a need for my business concept in other geographic locations? Is my business model easily teachable to potential franchisees? Am I comfortable in making the transition from owner-operator to franchisor?

Consult a Franchise Attorney

The sale of franchises can be a legally complex process at both the federal and state levels. The laws are often not uniform and can vary from state to state. Prior to selling any franchises, a franchisor must file a franchise disclosure document (FDD) with the Federal Trade Commission (FTC). The FDD is discloses extensive information about the franchisor and is intended to provide the potential franchisee with information needed to make an informed decision. A franchise attorney will be a valued resource in your franchising journey. They will assist in the preparation and filing of the FDD.

Consult a Certified Public Accountant

With limited exceptions, a business looking to franchise will need to include financial statements that have been audited by an independent CPA. Audited financial statements are required to be included within the FDD prior to filing, with the failure to do so leading to costly delays and fines. Like a franchise attorney, a CPA will be a great resource as you begin your franchising process. Along with performing the required audit necessary for filing of the FDD, a CPA can also discuss the various tax benefits of the franchising concept and can serve as a trusted advisor on a range of topics including tax planning, business valuation and M&A strategies.

Now that you know the resources available to you, it’s time to begin your journey of growing your business via franchising. Contact us to learn more and to speak to a certified public accountant at LBA Haynes Strand!

QuickBooks Online: Is It Right For Your Business?

QuickBooks Online has become a widely used alternative to the traditional desktop versions of QuickBooks. With up-to-date bank and expense information that is accessible by both the business owner and CPA (once the CPA is granted accountant access to the company) it’s easy to see the immense benefits. Business owners have no down time as they wait for their CPA to do monthly, quarterly or yearly work and CPAs have the most recent data in order to efficiently and effectively assist their clients in day-to-day business dealings.

Unlike the desktop versions of QuickBooks, QuickBooks Online provides users with the most current version without the yearly added cost of upgrading software. The highly secure QuickBooks Online servers provide immediate backup of your company files and is accessible from virtually anywhere you can access the internet. There is even an awesome app for the iPad that enables you to take photos of receipts and enter them into your bank or credit card register on the go. The portability and functionality of the program makes keeping your company’s financial records a breeze.

QuickBooks Online is allowing us at LBA Haynes Strand to stay ahead of the curve by achieving results through a fully engaged approach and diligent planning. To see a visual guide on converting to QuickBooks Online, click here or contact our office for additional information on the benefits and limitations of the software. 

The Day After Tax Deadline Day… What To Do?

It’s the day after tax deadline day, months of hard work and stress have come to an end.  Now what should you do? We are sure that you can think of many exciting things, one of which is probably taking a break from worrying about your taxes!  Enjoy having the peace of mind that your taxes are completed and filed, and if you are receiving a refund – you can track it here.  But you can also begin thinking about how to improve the process for next year!

Maybe your tax season didn’t go as smoothly as you hoped….maybe you didn’t receive the type of care and attention you thought you would receive when you hired your CPA.  If that is the case – your next step could be to actively shop for a new CPA.  You should look for one that is proactive in nature, that believes in timely communication, and one that is knowledgeable in all facets of tax and accounting.  You want your accountant to become a yearly resource to you.  If you only spoke to your accountant from January – April this year, that is part of your problem.  If you think the tax preparation was done incorrectly…you can contact our team for a 2nd opinion on your tax situation.  This is something that happens quite frequently and can make a BIG difference in some situations.

How To Improve For Next Year

Tax planning is the #1 way to improve your experience.  You can begin tax planning…NOW.  It is never too early to start to look at next year’s tax season and have a plan laid out.  Also this is a pretty great time to get appointments with CPAs.  As tax season has come to an end – CPAs are now available for face to face meetings and have much more availability.

So if you want to be an active participant in preparing for a better tax year, click the button below.  Our team of CPAs offer no-cost consultations and are excited for the chance to meet you and help you see the results you expect with your personal and business tax situations.

Julie Ayers Honored as a 2016 Most Influential Woman by The Mecklenburg Times

Principal Member Julie Ayers, CPA has been named as one of the honorees for The Mecklenburg Times’ 2016 50 Most Influential Women.  Julie’s leadership and professionalism made her stand out among scores of nominees.

At LBA Haynes Strand, Julie has helped lead the firm through a number of mergers and acquisitions, that have turned LBA Haynes Strand into one of the fastest growing privately held businesses in the Charlotte region.  In addition, Julie is head of the tax and charter school accounting departments at the Firm.

“To be mentioned as one of The 50 Most Influential Women is an enormous achievement for me,” says Ayers. “I am proud of the work I have done at LBA Haynes Strand, proud of the work the team has done at LBA Haynes Strand, and proud of my involvement with the women business community over the past 8 years – where I have learned so much and made such amazing connections.”

The 50 Most Influential Women will be honored during an awards reception on Friday, May 20th at the Hilton Charlotte Center City.  Also during the event, the Woman of the Year honoree will be announced.  This special award will be kept top secret until the announcement and will be selected from the 2016 class of honorees.

Non-Profit Tax Guide: Getting To Know The Form 990

The Form 990 is a tax document that tax-exempt nonprofit organizations are required to file each year with the IRS. The 990 discloses potential conflicts of interest, regulatory details, governance, compensation of board members and staff, and other details that relate to financial accountability. Filing the 990 correctly and in a timely matter, allows your nonprofit organization to maintain its tax exempt status. Once the 990 is filed, it is posted for the public to see. Websites such as Guidestar.com allow anyone to look at any organization’s Form 990, in order to get a better understanding of the structure and success of the nonprofit organization.

What’s the purpose of the Form 990?
  • Increased transparency and to provide a realistic view of the organization for the IRS and the public
  • Promote tax compliance by accurately reflecting the organization’s operations
  • Allow efficiency in the assessment of risk of noncompliance

The Form 990 has caused dramatic increases in the cost of compliance for nonprofits. At first, this only impacted the larger nonprofits. However, the smaller nonprofits are now feeling the increased cost of the 990.

Who is required to file a Form 990?

Tax-exempt organizations that have gross receipts totaling at least $200,000 or assets worth at least $500,000 must file the Form 990 on an annual basis.

When is the Form 990 Due?

You must file your organization’s 990 by the 15th day of the 5th month after your accounting period ends. For example, say your fiscal year ends on December 31st, then the 990 is due on May 15th the following year.

What are the penalties for not filing a Form 990?

There are many penalties for failing to file the Form 990 properly.  The list of penalties below can help you be prepared in order to avoid them.

  • The Penalty for not filing is: $20 per day, up to a maximum of $10,000 or 5% of revenue.
  • If revenue is greater than $1 million the penalty for not filing is: $100 per day with a maximum fine of $50,000
  • For failure to include information concerning liquidation, dissolution, termination, or substantial contraction: $10 per day, with maximum of $5,000.
  • Your “tax-exempt” status will be revoked if you don’t file for 3 years.
  • Once you receive an IRS notice and don’t respond: $10 per day on the responsible individual, up to a maximum of $5,000.
  • Failure to comply with public disclosure requirements: $20 per day in penalties, up to a maximum of $10,000.
  • There is no maximum penalty for failure to disclose the organization’s exemption application.
How to be prepared for the Form 990?

Being prepared is the best way to handle any tax situation.  Being proactive and having a tax plan minimizes the risk of any last minute tax surprises and allows you to be a little more stress-free when it comes time to file your Form 990 on an annual basis.  Below is a list of suggestions to help you be prepared when filing your Form 990.

  • Make sure you document as much as possible throughout the year for internal purposes.
  • Track as much information as possible from contributors, including amount, name, location, how they contributed, etc.
  • Track the revenue and expense by each event or by function.
  • Tip: Unrelated business tax income is a big issue!  If it’s not part of the core function, it is probably taxable.
  • Consult your CPA for specifics to your organization.  Every nonprofit organization is different and has different issues.

LBA Haynes Strand has handled the Form 990 for many North Carolina based nonprofit organizations, and our team is well versed in the nonprofit industry. Our nonprofit accounting team is ready to help your organization maintain its tax-exempt status and provide the accounting advice you need throughout the year to run a successful nonprofit. Contact us today!

Preparation: The Key to March Madness and Tax Season Success

The NCAA college basketball tournament is always an exciting and often maddening time for all of us.  While these teams are looking to play the part of bracket buster, your accountants are working hard to see to it that tax season is not a maddening time of year for you.  CPAs thrive on this time of year, and leave it all on the court..I mean…office, to make sure that their clients receive the best possible results.

Last second shots and unexpected upsets may be common in the NCAA tournament but are not common in our world.  Tax planning is the reason for this.  Tax season isn’t something that is done over the period of a couple months time, this is something that is worked on continuously throughout the year.  Accountants and clients alike must be equally prepared come tax season.  The quote of basketball coaching legend John Wooden sums it up best, “Failing to prepare is preparing to fail.” So let’s take a look at some steps that you can take to prepare yourself against the stressful affects of the April tax deadline:

Don’t Procrastinate … Be Proactive

Tax planning is not one single task, designated to one single month. Usually, when people finish their taxes, they breathe a big sigh of relief. Whew, glad that’s over. But it’s not over, in fact, tax planning for the next year should begin shortly after your taxes are filed for this year.

See what do we mean by adopting a proactive mindset? If you’re thinking ahead, and keeping your finances in order through the entire year (and not waiting for March to prepare them all) you’re avoiding unnecessary stress during tax season.

Collaborate With Your CPA

Most people attempt to prepare their taxes on their own. And most people miss out on golden financial gains. The average taxpayer does not have the expansive financial knowledge and insight of a professional accountant, nor should they, but that’s what makes do-it-yourself tax planning such a risky idea – you’re gambling with possible financial gains.

When you contact a CPA firm, not only do you receive the professional guidance needed to navigate complicated tax territory, you receive financial consultation catered specifically towards your company’s future.

Consider Wealth Management

Part of tax planning is considering your investment options. Most people shy away from investments because they strongly dislike the idea of possibly losing money. Investing is not a gamble, it is a calculated risk when consulting with a wealth management advisor.  The advisor takes in to account whether you are risk adverse and builds a plan that fits your needs and your desires. A wealth management service, along with your CPA and financial advisor, guide you in making the right decisions for building a sustainable financial future.

Discussion Before Decision

Even after you’ve learned a thing or two from your CPA firm, it’s still always a good idea to consult with them on significant financial circumstances. For example, if you’re thinking about selling your business, a CPA firm can give you the tax logistics, implications, and benefits behind all your possible options.

There are a number of financial factors that go into tax planning, and cramming them all into a one-month timeframe creates a chaotic mess of last-minute desperation. Being pro-active in your tax planning and consulting with professionals will help you avoid the stress and headache that are often associated with the April tax filing deadline.

Click the button below to begin your conversation with a coach..err…certified public accountant with LBA Haynes Strand and begin seeing the results of being prepared.

Breaking: Businesses Are Partnering With CPA Firms To Run Accounting Departments

The hiring of CPA firms as the accounting function of companies is growing. Once thought to be contained to smaller businesses, the use of a CPA firm as an accounting department is spreading to mid-sized companies.  Whether it is going to be called an “epidemic”, a “pandemic”, or an “outbreak” is yet to be seen.  The good news is business owners now have options on how to run their business.  In fact they have more options than at any point in history.

What does this mean?

Mid-Sized companies are facing many of the same issues that smaller businesses are going through.  They are wanting to run leaner businesses with less overhead, and are wanting to do so more efficiently.  This means that companies are continuing to look outside their own company for help.  Sure accounting firms have been offering accounting services to companies for decades – but what is new is that we are now offering accounting solutions to business owners.

Business owners are now asking, “Why would I pay a lone individual to handle my company’s accounting duties, when I can instead hire an entire team of professional accountants at a CPA firm to handle my accounting at a fraction of the cost?”

Good question – and one that every business owner needs to ask his or herself.  Hiring a CPA firm with an accounting solutions department is the here and the now, but also the future.

Accounting Solutions: What You Need To Know

There are many benefits to hiring an accounting solutions team.  The list of accounting solutions offered include: AP management, AR management, budget development, credit card processing, financial statement preparation and analysis, payroll management, QuickBooks support, and much more!  Companies aren’t just looking to maintain the status quo anymore, they are looking to better themselves and find competitive advantages over their competitors.  Companies are demanding efficiency and experience out of their accounting departments – when these demands are going unmet – you need solutions.

If hiring a CPA firm to be your accounting team is something that you are considering, be sure to consult with a number of CPA Firms and choose the one that best fits your company and your vision.  Make sure that they have the right staff in place to handle your needs, make sure you are not going to be charged by the hour, and make sure you choose a firm that you feel comfortable with.  You want to be able to call your CPA at any time throughout the year with questions, so make sure you feel comfortable with your accountant.  This person is going to effectively become a member of your team, so finding a CPA that meshes well with your personality and can fit into your office culture is an important part of the process.

Remember – you are running your organization.  When you use an independent accounting firm, you are in a better position to do so.  Let your CPA handle your daily accounting functions and you can better focus on the core competencies of your business!

Ready to learn more about the Accounting Solutions team at LBA Haynes Strand? Contact us for your free consultation!

What’s New At LBA Haynes Strand? Introducing The Accounting Solutions Group

LBA Haynes Strand, PLLC has decided to fill a need in the business marketplace and offer our clients with not just accounting services, but to offer legitimate accounting solutions. Our firm has announced the creation of an “Accounting Solutions Group” that will focus on offering flexible, scalable accounting and bookkeeping solutions for businesses and institutions of every size.

Principal Member David D. Fraser, CPA will lead a highly trained, qualified staff offering a streamlined accounting support and infrastructure that local businesses and organizations desperately need. Fraser had this to say about the group, “We have seen an increasing need in the marketplace for a third party accounting function in businesses. While we do look to provide services to these businesses, we are more focused on providing real world accounting solutions to the business community.  We are excited about this offering and look forward to helping start-ups and established companies grow.”

The Accounting Solutions Group at LBA Haynes Strand will offer the following menu of solutions:
  • AP management
  • AR management
  • Budget development
  • Business plans and forecasting support
  • Chart of accounts clean-up
  • Consulting services
  • Credit card processing
  • Deposit management
  • Expense reimbursements
  • Financial statement preparation & analysis
  • General ledger review
  • Monthly or Quarterly meetings to review
  • Payroll management
  • QuickBooks support
  • Sales and use tax reporting
  • Year End 1099s

Business owners will now have a third party to go to that supplies them with a full team of accountants and professionals that have the accounting knowledge of an entire accounting department at a fraction of the cost. The firm looks forward to taking the accounting off of stressed business owners hands and allowing those business owners to re-focus on leading and running their businesses.

To learn more about the Accounting Solutions Group, contact us for your no-cost consultation!