Tuesday, December 21, 2010

Let's run more business out of town

As you are probably aware, the state of Ohio has a 5 1/2 percent sales tax. In addition to the state sales tax, counties throw on additional tax. Most counties in Ohio add another one percent (Cuyahoga county adds another 2.25%).

The tax in and of itself is bad enough for the consumer. But the sales tax requirement for the businesses collecting the tax for our Columbus pols is getting downright ridiculous.

For instance, last year, the state required all businesses to file their returns electronically regardless of the amount of tax due.

Now I still have clients who don't have computers so I have to file these returns for them adding fees to the process. In these winter months, I have to charge clients to do sales tax returns for months they have zero taxable sales. It's patently ridiculous.

Starting next month, the state is accelerating their collection. So for some tax collectors they'll now have to send in a payment by the 23rd of the month as an estimate for the taxes collected that month.

Meaning if Company A has taxable sales, by January 23rd they'll have to send the state an estimated tax payment of projected January sales. Then you are required to file your return and pay the rest of the sales tax by the following 23rd.

If the state doesn't get at least 75% of that month's sales tax by the 23rd, they'll be nice enough to throw you a penalty.

Now if you have the kind of business that generates lots of sales at the end of the month, if you don't pay enough tax in before you actually collect it, you're screwed.

So if you are a big ticket retailer that does lots of promotional sales towards the end of the month this is going to be yet one more straw on your camel back. Seriously, sales of big ticket items are really difficult to project. So how do you pay something when you have no idea what you're going to collect?

As I've said before, I'm rarely the smartest guy in any room but I watch what the smart guys do and then I emulate it.

Ohio has decided to do what successful states have done to attract business by following California's lead.

And we wonder why we're losing a couple of electoral votes this census.

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