"We're a non-US company who has, up until now, avoided a physical presence in the US. We ship products to US customers (usually distributors and dealers) but have no reps, warehouses, plants, offices, etc. anywhere in the States. We're considering establishing warehouses in a few places and figure that will give us nexus in those states. Where do we find advice on making this decision that isn't going to be expensive?"
That last question makes this question pretty much applicable to all of you...
There really isn't a cheap solution. The best (and most expensive) one is to hire one of the giant CPA firms and have them do a study for you. It would take into consideration sales and use tax rates, complexity, audit friendliness, rules about nexus, certificate requirements, drop shipping, any possible and unusual exemptions you might be able to take, etc.
For example, there's at least one state that has an exemption for warehousing equipment, conveyors, racks, etc. That's unusual, but something that someone in your type of business may be able to use.
The big problem is a common one that I've talked about over and over again: it's amazing that even the big CPA firms often do not have anyone who really knows sales and use taxes inside and out (at least handy to where you are). For example, the resident expert may not know that there's that one state that has that warehousing exemption!
So make sure you're talking to the top sales tax expert at the firm, regardless of their physical location. And make sure they look for any industry specific exemptions.
And, much as I hate to admit it, pay attention to the other potential taxes as well:
Income taxes (both corporate and personal - you'll have staff there)
Gross receipts taxes
Business occupation taxes
Employment taxes (your list mentioned California - beware!)
and other too-numerous-to-be-mentioned-here taxes
And many of these are administered at the county, city or district level, so it's not just about the state.
That's the best solution.
The cheap solution...
Pick your locations purely on operational grounds. Then buy a copy of the American Bar Association's Sales and Use Tax Deskbook. It's close to $300, but is the best single source of SUT laws that I've seen. You can get a pretty good idea of what's going on by using this book. Review the chapter for the state you're considering. If it looks too messy, then move on to the next state.
Another nice thing about this book is that it gives you the chapter authors for every state. Expensive, but well qualified people who can help you.
In other words, do your own research, but use a good tool to do the research.
Unfortunately, that doesn't help with the other taxes. And they can be nasty.
I think, in the long run, you'd be safer using the expensive approach - hire some pros. But make sure they actually are experts at sales and use taxes, dang it!
Sales Tax Guy
|Here's information on our upcoming seminars and webinars|
|And please don't forget to visit our advertisers!|