The #1 Tax You NEED to Get Right in Your Business

You are working so hard in your business, managing all these different areas, and you might think that you're getting things dialed in, but oh, my gosh, what about sales tax? Right? Not to scare you, but there's some new regulations that have come on the scene that you better know about or you could lose your business. Find out more right here, right now on Allie. And you'd welcome to Ali and you'd the Business Success and Lifestyle Show. My name is Allison. My friends call me Allie. I'm a business growth mentor and, and I'm here to help you take your business to the next level. And highlighting incredible experts that are gonna give you the answers that you need and the strategies to put in place so that you can skyrocket your business right now. So today I'm super excited because there's some really important information you need to know about sales tax. Right? Don't forget this important component in your business. And today I have the expert. And Dina Obersa is going to tell you everything that you need to know. She has been in the sales and use tax industry for over 25 years. She knows it inside and out. So she started her career at two large public companies and then began consulting with Arthur Anderson. You remember Arthur Andersen. I actually have a funny story about that. I'll tell you later.

And.

And so she's been responsible for developing the sales tax compliance because you need to make sure that you stay compliant and also automated practices so that you don't have to worry that you have this in place. So she's done this for major accounting firms. And then she took the leap, decided to open her own company called Gable Tax Group, where she has a consulting firm and where she specializes in all of this with sales and use tax for small startups to Fortune 500 companies. So, Dina, thank you for coming.

Thank you for having me.

So I'm really excited you're here because you have so much to share about sales tax. And for some of you, you might be thinking, well, you know, that's not like the sexiest topic.

Depends on who you ask.

But I know for you, I turned you on. But the thing is that I'm excited because I need to know. I know there's some new things that new regulations that have put in place and, like, you cannot turn a blind eye to this at all. So before we get to that, how did you. We talked a little bit about your professional journey, but how did you get to becoming the sales tax expert? Is this something that you were always interested in in finance? And so Forth.

Yeah, it's actually kind of funny because sales tax is not something you learn about in school. You can't even take a class in it. At least not back in my days. Maybe they've expanded that. But my parents are self employed, so I grew up in a self employed family. Actually, everybody in my extended family was also self employed. And so they always met with their cpa. Right. So every month as a little kid, my parents would take me and I was like so enamored by the office and the dress, the suits. And I was like. And I loved math. So as a young girl, I said, that's it. I'm going to be an accountant. I'm going to do income tax returns for people. I can help people. And it was just something I naturally gravitated towards. So I went to school, obviously I went to college and got a degree in accounting and, and was really set on having my own CPA firm doing income tax. But in order to do that, I had to get a job and learn how to do income tax. But I ended up in the sales tax department at a company in Burbank. It was my first job and even then I was striving to get into the finance group. I was determined to learn income tax. So I did sales tax and I did property tax. And I got a call from a headhunter who actually is down here in San Diego area and said, dina, if you can have two years of experience in sales tax, I will place you at another company for a lot more money. Okay. I still have a dream. I'm gonna do income tax. So I stayed at that company and sure enough, two years later, she called me. Wow to the day. And I was like, well, I'm not following my dream. I really want to do income tax. She placed me at a company in Irvine, closer to home. And I spent the next few years doing sales tax. And I loved it. I really got really deep into understanding how a corporate culture works and the interactions with different departments. And at that point, she called me again two years later and said, you need to get in consulting. And I landed at Arthur Andersen. Wow. Very non traditional route. Yeah, but at that point, you're already so far in your career, you're kind of stuck. There's no going back.

Within a few months, she's going after this contract and that contract. But the thing is, you've been doing it for 25 years, right? So it really is, you're just taking that expertise and you're shifting it towards your own. So it's almost like Not a new business, in a sense, because you've had this. You've been working with clients for years.

Well, and I've been developing the sales tax practices for every company I've gone to. They were not in this business. It's actually why they hired me.

Yeah.

Arthur Anderson didn't have it. Ernst and Young didn't have it. I mean, I can go on and on at the companies I've been at. They specifically hired me to start their sales tax business. So I've created it. I've been in an entrepreneurial role.

Yeah.

I'm just not the end benefactor.

Yeah, now you are. Now you are. So what do you feel are the biggest challenges that business owners go through when it comes to money? Their taxes and so on?

Yeah, I think when you are a business owner, as I am as well now. Right. Trying to navigate all the various taxes that you're responsible for in the sales tax arena, I think it easily gets lost. I think a lot of business owners are more worried about their business taxes and their income tax. Sales tax is kind of like the ugly stepchild thing that nobody wants and it's a pass through tax. So one of the things that business owners, as they start to realize that they have a sales tax responsibility, one of their biggest challenges is the risk. They want to know, Dina, what is the risk of me not doing anything? What is the risk if I do it wrong? You know, how do I pay it? You know, if I charge tax to my customer, when do I pay it to the state and how. So when I talk about financial risk to business owners, a lot of the time it has to do with cash flow. As a business, cash is king. You understand, you want to make money, you don't want to lose money. But sales tax, the tax jurisdictions expect you to pay it when you accrue it. Now I'm going to get a little accounting techie on you, but it's not a cash based tax. So you don't wait until you get it from your customer and pay it to the state.

So this is important. Okay, so listen to what she just said here. Repeat that again.

Yeah, so if you are the type of business that bills your clients and they have terms like 30 days to pay or 60 days to pay your fee for the products or services, that doesn't mean you have 30 or 60 days to pay the state. We'll use California. You don't have 60 days to pay the state of California. So if you billed a customer in the month of July for your services, you have to put it on the tax return in August, the client may not pay you for three, four months.

Right.

Which means cash flow. So that's a huge challenge in a business, cash flow.

And that's interesting because I think a lot of business owners feel like it's. Once I collect it, then I'm gonna put it aside or even spend it.

A lot of smaller businesses spend it. You know, if they have to file a tax return every quarter, I go, okay, where's the money? They're like, you have to go get a line of credit. Cause I don't have it anymore. I didn't know I was supposed to set it aside and pay it. So it definitely is a cash flow situation that needs to be close, closely.

Monitored, and especially as you get further into your business and you really start bringing in more revenue, so. Because I remember when I first filed to get a sales tax number many, many years ago in one of my earlier businesses, you. I had. They said, okay, well, you only need to file once a year, you know.

Right.

Because I wasn't bringing much money in. And then when that started increasing, then it was, you know, on a quarterly basis and so forth, so.

Right. That's right. The filing frequency will change as your business grows. I have a girlfriend who makes yoga clothes, and she has an annual permit. And I said, I'm going to file your return. It's due this month, July. And I said, so what were your sales? And where's the tax lawyer? She goes, you mean I was supposed to put it aside? I'm like, yes. She goes, well, I don't have it anymore.

Yeah.

It's like, well, you owe it, so.

Yeah, you better come up with it.

So as a small business, you're right, it's hard. It gets lost in just the cycle. But if you're a larger business and you have sales of, you know, millions of dollars, you actually have to file it monthly. And we're not just talking California. This is across all North America.

Yeah, all states. So it's important that you check into that, you know. Now there's been some changes that have just happened that are big news. Okay, so let's. If you could share that.

What.

What just occurred.

Well, it's been on national tv. I can't believe sales tax actually made it to national television. I don't really have to explain to people what I do anymore, because once I say sales tax, they're like, oh, that Supreme Court quill Internet tax. So on June 21, you may have heard the Supreme Court had overturned what they call the Quill decision. Quill was a case that was heard back in the early 90s. So it's really kind of the first time in my career where there's big national news that impacts every business, domestic and international, and not just in the sales tax world. So what happens in businesses is that they only collect tax where they had physical presence. So that was the Quill case. That was a national case that said unless you had physical presence in the state, you were not responsible to collect and remit the tax. And so that helped businesses that did interstate commerce be protected from local laws. So the South Dakota versus Wayfair that was all over the news is what the big case was. Wayfair is an Internet business. They sold goods to South Dakota customers but had no physical presence. So they're like, I don't have to collect tax. South Dakota says, oh, no, no. You've done $100,000 or more here you have substantial presence. And our legislation says you have to collect tax. And Wayfair fought it. And so we're taking it to the Supreme Court and took it to the Supreme Court, and the Supreme Court got rid of the test that said physical presence was the threshold. So now South Dakota can tax all businesses that have $100,000 or more in their state. They're not the only state. This has been going on for quite some time. And this will start to roll out across the US there's already about 21 states that have this term called Economic Nexus. I won't get into it today. It's way too technical. We can definitely follow up on Economic nexus.

But you have a webinar. I have a webinar that we're going to give you, actually on our library, and it is@alisonmaslin.com library and you'll have this incredible webinar from Dena on going deeper in this. We still have lots more we're going to share with you today. But if you want to learn more about this, you can get that webinar and also some great downloads from other guests that we've had on Ally. And you'd. So can you just give me an example on this? So a company that is selling a product and they're in, you know, California and they're shipping it to other states, but they're not in those states. They weren't. They didn't have to charge sales tax.

If they didn't have physical presence.

Right.

Okay. And I'll leave the Amazon story out of this. That's a whole other topic.

Okay.

If you're using Amazon to fulfill your orders. You already had a collection responsibility. But we'll stay with today's times and what's happened since the Supreme Court overruled Quill. You're here in California. You ship your products to Arizona. Right. Using your own fulfillment and you don't have any physical presence in Arizona. Prior to this overturn of this case, you didn't have to collect sales tax. Your customer is supposed to self assess it and pay it on their income tax return. But nobody does that. Now what has happened is so since physical presence doesn't dictate the connection with that state, Arizona can pass legislation that says if you California business sell in my state to my in state customers and reach a certain dollar threshold, then you have to collect.

Right.

Now some states, it's not even a threshold. Some states have already said if our people can buy on the phone, on the Internet, it's called click through nexus, then you have a responsibility so that.

Money goes to that state. So this is a way for these states to collect a lot more.

Well, you know, they've lost the money when the Internet became really big. They've lost the revenue, the brick and mortar, no one shopping in the stores as much as they used to. I mean you can just go online and buy whatever you want.

Right.

So they're losing the revenue.

Yes.

And the situation with South Dakota was interesting because South Dakota doesn't have income tax. So you know, South Dakota residents didn't even have a way to report.

Did you know that South Dakota doesn't have income tax?

So they had no way to capture that revenue.

Wow. Okay. Well, this is big news. So and so why don't you tell me if you know, what does someone need to do to make sure that they are compliant with everything that's going on?

Sure. So first of all, you need to figure out where you need to collect. And one of the things that we usually ask our businesses is to show us your sales by state for the last 12 months and let's see what kind of activity you have. And if it reaches some of the thresholds for those jurisdictions that have what we call economic nexus, then we encourage businesses to register to collect and remit the tax. Remember, sales tax is a pass through tax, not supposed to cost you the business owner. You're supposed to pass it on to the customer.

Right.

But there's a lot of work that goes into that for a business owner that puts you at risk. That eats up your resources and could cause some customer service concerns.

Right. So you Want to discuss this with your accountant? Right.

Yeah. So it's interesting you say that, Alison, because the accountants are getting inundated with these questions. The problem is most business owners accountants or CPAs are in their own state. So again, I'll use the California example. California business goes to their CPA says, hey, I heard about the Supreme Court. What do I do? They don't have knowledge outside of California. Right. So this is where someone like Gable Tax Group comes in. We're a specialist in all of North America, all of us and Canada. And so we work a lot with the local CPAs to provide the guidance to their customers because they just, they don't have the knowledge outside of their own state. Right.

So you're definitely going to want to reach out to DENA to get information on this and see if they can support you. And of course we'll have your information on the library and, and so forth. But, you know, it's important. You definitely don't want to like, you know, ignore this because, you know, this will put a company out of business, you know, because they're pretty serious about collecting their sales tax.

Well. And this actually goes back a long ways. And I'll just give you a quick story about putting out of business. I had a.com and Internet company back in the 90s, right. Back in the late 90s when I was at Arthur Andersen still. And they did not want to collect sales tax because it couldn't stay competitive. And so they absorbed it and reported it as a cost of doing business. Well, they were a California based company and they had a repair, a third party repair person in Texas. And Texas said that gave them physical presence, wasn't one of their employees, it was just a vendor. And Texas came after them for millions of dollars.

Wow.

And when you sell on the Internet in the 90s, you're not gonna go back to all your customers and say you owe me money and just file bankruptcy. I mean, just put them out of business completely.

Wow.

So, you know, this isn't even like.

The new messages here. It's like we're not trying to freak you out or anything like this. Well, we want you to be successful in business. And this is an important component if you. It is cost of doing business. Right. And so, yeah, so we definitely want you to get on that. And as we wrap up here, is there some final advice that you would want to share?

I would say that now is kind of the opportunity to really look at where you're doing business and, and talk to somebody. Because the states are all in a frenzy right now. They don't know what to do with this change. And the states are going to start rolling out legislation and I'd like you to get kind of ahead of it. Like if you can start to establish between now and the end of the year where your exposure is, then you can have an action plan. This is like, to me, the best time for businesses to come clean. So. So if you ever thought you had sales tax exposure and risk everywhere, now's the time I call it to kind of get in while the states are getting everybody registered and come clean and get your books and records clean for 2018.

Yeah. Fantastic. And beyond.

Right. But you know, try to clean up whatever's going on in your business and your footprint across the US get it cleaned up now so that you can report at the end of the year. You can just say, I'm an annual filer. I'm going to file my taxes for December and get clean. So you have a few months to kind of do your evaluation. Or again, you can actually call us at Gable Tax Group. We will give you a free 30 minute consultation and we can do the analysis for you.

Awesome. And we will go ahead and put that website information right there for you to grab. And then also on our library, allisonmaslin. Com Library. So I hope you have enjoyed this episode of Ally and you. I know that I have. And you better believe one of the calls I'm going to do later today is through my accountant. Right. And, and also, so just know that we, we come live every Wednesday at 4, right on my Facebook page. You can also go to subscribetoally.com and get us right there on itunes.

And.

And please go ahead and subscribe and if you enjoy it, please write a review. We would so appreciate that and I hope that you enjoyed this. This was awesome. Thank you.

Thank you, Alison. This was the perfect opportunity to share this information with your audience.

Yeah. Well, you've been doing it now 25 years. I think you know your stuff.

Yeah. All right. Thank you.

All right, everybody, have a great day. Until next time, get out there and elevate yourself. You are worth it. Bye. By.