Smart state and local tax strategy delivers big payoffs for small and mid-sized businesses

The average citizen tends to think of taxes almost exclusively in terms of federal obligations, but every business owner knows differently. State and local taxes (SALT) often represent an even greater burden, especially when measured in terms of complexity and effort required for compliance. As we embark on another new year, it’s critical for leaders to adopt a proactive approach to managing SALT responsibilities.

Meeting SALT obligations is an increasingly difficult task for business leaders. As consumers purchase more goods and services online and remote work becomes commonplace, states and municipalities are attempting to capture their fair share of the action. The result is a constantly evolving patchwork of requirements that vary by state, city, county and even by zip code at times. Navigating this maze is no simple matter!

Despite the complexity, business owners have no choice but to comply with all applicable SALT requirements. The potential costs of noncompliance pose a serious threat to enterprises of most sizes and can represent an extinction-level event for smaller organizations that lack the deeper pockets of their larger counterparts.

In addition to the financial costs of noncompliance, leaders must recognize the key role that SALT strategy can play in profitability and competitive edge. Though the legislation is vast and intimidating, a thorough understanding of what is possible as well as what is required can make a big difference to the company’s bottom line.

  • Where has the business established economic nexus?
  • Which products and services are taxable by the various tax authorities where the company does business?
  • Is the company overpaying in certain areas or due a refund?
  • Is the business eligible for tax exemptions, credits or industry-specific incentives available through cities, states and economic development organizations?

Exploring all the possibilities and attending to the myriad policy details for every relevant location and taxation level doesn’t just mitigate risk; it also represents an opportunity to minimize overall tax burden and reap significant cost savings, offering business owners with a strategic approach to SALT a meaningful advantage over their less proactive competitors.

Besides the financial considerations, there’s the inevitable hit to productivity that occurs when leaders’ attention is diverted from core work. Turning to an external provider for assistance with specialized concerns such as SALT frees leaders to focus on the business at hand, where their knowledge is truly irreplaceable.

Mauldin & Jenkins provides a variety of SALT services to help business owners achieve full compliance while benefitting from the deep knowledge and experience our SALT specialists.

Nexus Study – Evaluates your SALT footprint with regard to income, franchise and sales tax. Nexus studies include analysis of your sales, purchases and operations to definitively determine your obligations in each jurisdiction.

Taxability Study – Identifies and determines the taxability of your products and services as well as purchases the company makes, including energy and other inputs.

Sales Tax Outsourcing – Starting with a full analysis of your sales, purchases, exemption certificates, technology and compliance processes, our SALT specialists then apply the appropriate calculation information for each jurisdiction to prepare and file all required returns and make timely payments.

Refund Review – A thorough review of accounts payable to identify overpaid sales tax and file refund requests/returns as appropriate.

We encourage clients to consider a SALT consultation to help position your business for success in the coming year. Working collaboratively with business leaders, our CPAs bring the knowledge and skills to uncover and address SALT issues and help you navigate complicated multi-state tax laws. Whether you have been selected for a tax audit or simply want to gain the benefits of a smart SALT strategy, please know that we are here for you.