As we are in the midst of tax season, many small business owners have turned their focus to compiling and filing tax documents for 2022. This is a process which takes time and a great deal of effort on top of all the typical day-to-day work required of business owners, with tax-related issues accounting for 4 out of 10 of the top issues facing small business owners. Unfortunately, recent changes in tax legislation have made interstate commerce far more difficult, and this burden is even greater for small business owners who don’t have as much access to the resources available to larger corporations. Staying up to date with new regulations and taxes across jurisdictions can become just too much for those trying to start or expand their business.
In 2018, the Supreme Court’s ruling on South Dakota vs. Wayfair implemented new “economic nexus laws” for business across state lines in accordance with the growth of ecommerce. Now, when a business makes a certain number of transactions in another state’s tax jurisdiction, they are required to collect sales tax in that jurisdiction and report this income in their yearly taxes. With over 12,000 different state and local tax jurisdictions in the U.S. (averaging to about 240 per state), keeping track of all the individual laws for each state can place an enormous amount of stress on small business owners. These regulations can often discourage entrepreneurs from seeking to expand their business into other states. In addition, franchise taxes apply to nearly all businesses, whether or not they are franchised, and can be prohibitively expensive or easily missed without proper accounting. All of these tax laws amount to a great deal of additional time and resources required of small business owners.
In an effort to alleviate these stressors placed upon businesses, National ACE seeks to advocate for simpler tax legislation. If these laws were easier to navigate, entrepreneurs would have ample opportunity to expand their businesses without fear of additional fees and with a lower likelihood of misreporting their yearly taxes. We call upon you to urge your federal, state and local officials to consider simplifying tax provisions for small businesses, and also encourage you to be on the lookout for tax credits to save your business money. These changes would open many doors for small businesses, allowing for previously unavailable growth and expansion.
