The Impact of Business Changes on Your Sales Tax Responsibilities

Summary: This blog post discusses the implications of changes to your business structure, FEIN, owner/officer information, and business address on your sales tax responsibilities. It highlights the importance of keeping this information up-to-date and consulting with a Sales Tax Accountant to avoid any compliance issues and unexpected costs.

Introduction

As a business owner, you may not realize that significant changes to your business structure can have a considerable impact on your sales tax obligations. This blog post will help clients understand the implications of these changes and provide a handy reference for employees to ensure that this information remains consistent and easily accessible. We’ll discuss how changes to your business structure, Federal Employment Identification Number (FEIN), owner/officer information, and business address can affect your sales tax responsibilities.

Changing Your Business Structure: Sales Tax Implications

Why Does Business Structure Matter?

The legal structure of your business affects how your account is registered in states where you file sales tax. Most state applications include questions about your company’s ownership and tax treatment preferences. Some states may even require submission of your Operating Agreement or Articles of Incorporation. If you update your business structure, your existing sales tax permits may not be valid. 

Updating State Accounts After a Change

When you change your legal business structure, you’ll need to update this information for each of your state accounts. Some states may require you to close the current permit and reopen a new one. Others may request evidence of the change in business structure. 

TaxValet can help you update your sales tax permits based on your business structure change. If a state doesn’t require opening and closing sales tax permits, we can provide this service at no cost. If we need to close and re-open permits, there’s an additional fee for this work. 

The Impact of Changing Your FEIN on Sales Tax

Why FEIN Changes Matter

If you change your business structure and adopt a new Federal Employment Identification Number (FEIN), this can have significant effects on your sales tax permits. All state permit registrations are tied to one FEIN, so when that changes, you’ll need to close the old accounts and open new permits for the updated business. Your FEIN is what your sales tax permit is officially connected to from a legal standpoint, so it is critical that your FEIN matches the sales tax permit that you have. If you do not update your FEIN, this could create significant issues under audit. 

The Cost of Changing Your FEIN

Closing and reopening permits in every state you hold a license can be expensive, so if you’re considering changes that include a new FEIN, it’s crucial to consult your Sales Tax Accountant early in the process. This will help you understand and prepare for the full scope, timeline, and cost of the change.

Taxvalet can help you update your sales tax permits. Just keep in mind that this could be a large project, so the more advanced notice we have, the better. 

What percentage of businesses get audited? Which states are most aggressive? And how much does a sales tax audit cost? Get your answers by email today…

Updating Owner/Officer Information: Sales Tax Considerations

Keeping Information Current

It’s natural for company officers to change over time, but it’s essential to keep this information up-to-date in your state sales tax accounts. If you have updates to your company’s owner/officer information, inform your Sales Tax Accountant so they can make the necessary changes in your state portal at no extra charge.

The Impact of Changing Your Business Address on Sales Tax

Staying Up-to-Date

Business address changes are inevitable, but it’s crucial to keep this information current in your state sales tax accounts. If you have a new physical location or mailing address, inform your Sales Tax Accountant so they can update this information in your state portal at no extra charge.

Conclusion

Understanding the impact of business changes on your sales tax obligations is crucial for maintaining compliance and avoiding costly surprises. By keeping your business structure, FEIN, owner/officer information, and business address up-to-date, you can ensure that your sales tax responsibilities are properly managed. Reach out to your Sales Tax Accountant whenever you need assistance with these updates or have questions about how changes may affect your obligations.

Related Blog Content

State-by-State Guide: How to Cancel Your Sales Tax Permit Account in Each State

What Are the Penalties for Not Paying Sales Tax?

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