What are my company's responsibilities with the IRS and State after the formation is complete?

After successfully registering your company, it’s essential to understand your ongoing responsibilities with both the IRS and the state to ensure compliance with U.S. regulations.

Important Notice: As your company’s Registered Agent, Globalfy is responsible for informing you about your state-level obligations. However, it is the client’s responsibility to review, complete, and make any necessary filings or payments related to these requirements.

MONTHLY

Initially, opening your business does not bring you any monthly obligations to the state or IRS. However, we recommend that you verify the obligations that may exist through other licenses or processes that you have done in parallel.

You will receive an invoice if you have selected a monthly plan. If you have provided authorization for credit card payments, the amount will be automatically charged to your card.

 QUARTERLY

1) SALES TAX

Sales Tax is a tax paid by the customer when purchasing physical products, and the rate can vary depending on the state.

For example, if you sell a product for $100 and the applicable Sales Tax is 7%, you would charge the customer $107. Then, you must pay the $7 to the state.

When deciding whether or not to charge Sales Tax to a customer, you need to consider whether your business has nexus (a tax connection) in that state. There are three main types of nexus:

1. State of Registration:
   If your company is registered in Florida, for example, you're required to charge Sales Tax to all customers with a shipping address in Florida. Some states, like Delaware, do not charge Sales Tax at all.

2. Physical Presence:
   If your business stores inventory or has a warehouse in a specific state (e.g., California), you’re required to collect Sales Tax on sales made to customers in that state—even if your company is registered in a different one.

3. Economic Activity (Economic Nexus):
   Since July 2018, many states have adopted Economic Nexus rules. If you exceed a certain number of transactions or revenue threshold within a 12-month period in a specific state, you're required to collect Sales Tax there too.

4. Type of Product:
   Sales Tax generally applies to physical products. Digital products and services may have different rules depending on the state.

Contact us if you want to hire our Sales Tax registration support!

Once issued, which typically takes around 15 days, your company will be responsible for calculating, reporting, and remitting the sales tax collected from customers to the state on a monthly or quarterly basis. Please note that these reports must be submitted even if no sales tax has been collected during the period.

Additionally, it’s essential to have reliable sales management software, such as Shopify or Xero, and maintain proper control of your company’s inventory.

For these reports, we recommend using TaxJar, a software that integrates seamlessly with platforms like Amazon, eBay, and Shopify. It automates sales tax calculations and submissions, all for just $19 per month.

If your Sales Tax permit is issued on a general basis, the reports and tax returns must be submitted to the state quarterly, on the following dates: April 19, July 19, October 19, and January 19.

2) WITHHOLDING AND ESTIMATE TAX

In the United States, the income tax return is annual, made at the beginning of the following fiscal year, but taxes must be collected quarterly throughout the taxable year.

Withholding or Estimated Tax Payments are not additional taxes. Instead, they serve as a guarantee to ensure that, at the end of the tax year, you can file your tax return and either pay any outstanding balance or receive a refund if you’ve overpaid.

Companies that have our bookkeeping service can receive support from our team regarding this obligation to the IRS.

ANNUALS

1) ANNUAL REPORT / FRANCHISE TAX

States require businesses to submit an Annual Report each year to maintain their good standing. The fee associated with this renewal varies based on the specific state in which your company is registered.

Failure to complete the renewal within the specified timeframe may result in a penalty, and your company cannot do business until this requirement is fulfilled.

If you require our assistance with the annual report, please ensure that you hire our services days before the due date. This will allow us sufficient time to complete the necessary work promptly and avoid penalties.

 2) INCOME TAX

You are required to file an annual income tax return, but the specific forms you'll need to submit to the IRS will depend on several factors related to your business structure and activity.

For more information about these scenarios, follow this article:

https://help.globalfy.com/help-center/does-my-company-need-to-present-taxes-this-year