home office tax issues

This past year was the first year that I was fortunate enough to work from my home. Working from my home has been a wonderful change for both personal and professional reasons. The only thing that caused a slight issue was the tax filing changes that I had to endure. The office in my home was now considered a tax deduction. I had to get some help learning how to deduct the things that are allowed on my federal taxes. If you are new to working from home and have a home office, this blog can help you learn what you need to know before tax time rolls around.

Starting A Small Business In Colorado? A Beginner's Guide To Sales Tax Reporting


If you're planning to start a small business in Colorado selling anything, you've probably wondered what your responsibilities regarding taxes might be. Sales tax is something most Colorado entrepreneurs have to deal with, but it doesn't have to be as intimidating as you may think. Here's a quick guide to handling your Colorado sales tax obligations.

Who Do You Charge? Colorado's sales tax system is based on the idea of "nexus" -- the physical location your business sells from. Most small or home businesses have one nexus: their sales space or inventory location where things are shipped from. When your nexus is in the same jurisdiction(s) -- state, county, city, or special taxing district -- as the customer's nexus (location), you would charge them the appropriate sales tax. For example, a seller in Fort Collins who delivers to a buyer in Loveland shares two jurisdictions: state and county. The Colorado Department of Revenue provides a list of taxing jurisdictions (you may be subject to more than one) and whether you can report their taxes to the state or if you must report to the jurisdiction directly (contact info is also helpfully included). 

How Can You Calculate the Tax? If you're a stationary seller, you will likely simply need to learn the sales tax rates applicable to your home location. If you sell online or at other locations, you can look up several officially recommended providers whose websites can help you determine which of the 4 jurisdictions you share with your customer (based on the address) and how much to charge for each applicable sales tax. Simply look up any long-distance customers by address and use these rates to collect the correct tax. 

How Do You Report? You can apply for a sales tax license through the Department of Revenue website. In addition, the actual tax is reported on Form DR 0100. Based on the amount of expected sales tax due, you are required to file either monthly, quarterly, or annually. Returns are due on the 20th of each following month. The easiest way to file is through the Department of Revenue's online system, but you can also drop off Forms DR 0100 to a local office throughout the state or mail it in. 

Where Can You Learn More? The Department of Revenue offers free, two-hour sales tax classes at various times. These classes are small and very hands-on, so you can learn the basics of how to calculate the taxes necessary and how to fill out the DR 0100 reporting form. You will do sample returns and have the opportunity to ask questions during and after the class if you have specific concerns about your own business.

If you have multiple locations or sell items that may be exempt to some sales tax rules, you may benefit from working with an accountant who has experience in small business accounting and tax reporting. Because there can be penalties and fines for not reporting correctly, it's best to be sure you understand the system and can have confidence that you're meeting all your taxing requirements. Then, you can focus on making money at your new business. To learn more, contact an accountant like Don Lamb CPA Inc P.S.


27 February 2017