Page 38 - BusinessWest June 27, 2022

Nexus sachusetts
as many do. Massachusetts still utilizes a three-factor formula (sales, payroll and property) for most busi- nesses. Most states have transitioned to sales as a single factor to determine apportionment.
The impact on recordkeeping
In order to ensure state tax compliance, business- es must keep records that perhaps were not required in the past. Thankfully, most businesses have a com- puterized accounting system, however, it may require more detailed information then previously needed to determine filing requirements.
For instance, the number of transactions by state may not have been a standard reporting item in the past. Another consideration is that the invoicing state may not necessarily be the state where the product
is being consumed. If that is true, then the shipping records must become integrated into the account- ing records to provide accurate sales-by-state reports. Given the digital footprint left by any type of transac-
sic method. If you have a smart phone, we recom- mend the app, TripLog. If you use QBO, then you have access to a free mileage tracker that you can access through your smartphone (see links below for details).
https://quickbooks.intuit.com/accounting/ mileage/#mileage-app
https://triplogmileage.com/
The IRS requires certain information when track- ing mileage. Be sure you are recording the following:
• Beginning and ending destination; • Business purpose of trip;
• Miles driven;
• Dates of trip;
tion, states are aggressively pursuing businesses look- ing for some type of economic presence requiring the business to register and pay various tax types.
Also, employers must keep track of employees who work remotely by state. This can be especially challenging for hybrid employees who may reside in a different state than which the employer is located. The record-keeping requirements and then comply- ing with all state filings (employment, sales, income, gross receipts, and franchise taxes) can be complex, costly, and overwhelming for small businesses.
Not only can it be very complicated and costly to ensure that a business is complying with all state fil- ing requirements, the rules are complex and subjec- tive in nature. This is why it is always best to consult with your tax advisor. u
Colleen Berndt, CPA is tax manager with Lapier, Dillon & Associates PC; (413) 732-0200.
• Odometer reading at the beginning and end of each tax year.
Hopefully this provides some insight into some
of the more common questions on this often-con- fusing matter. Reach out to your tax advisor for more detailed information or individualized tax planning. Vehicle deductions are some of the largest tax deduc- tions a business owner gets, and you want to be sure you are maximizing this tax write-off. u
Garrett Kelly, CPA, Tax Manager, specializes in
tax planning and compliance for residential and commercial real estate, pass-through entities, and family groups.
Continued from page 36
will presume
that a busi- ness’s corporation’s virtual and economic contacts
subject the corporation to the tax if the volume of the corporation’s Massachusetts sales for the taxable year exceeds five hundred thousand dollars. Again, each state has its own unique set of rules to determine nexus.
Remote employees’ impact on nexus
Generally speaking, a remote employee will create nexus for the employer for tax purposes. Many states provided relief for pandemic-related circumstances, but most of those provisions have since expired. Nexus created by remote-working employees can create significant tax liabilities in new jurisdictions, especially for income tax purposes where the com- pany has significant receipts from the state and the state apportions using a single sales factor formula,
Vehicle
to deduct actual expenses in the first year, you are stuck with
this method for the life of that vehicle. If you choose mileage deduction the first year, you are able to switch to actual expense in later years.
‘What is the 2022 business mileage rate deduction?’
58.5 cents per business mile; 18 cents per mile for personal medical, military, and moving expenses; and 14 cents per mile for charitable driving.
‘I would like to start tracking and deducting my business mileage. What do you recommend?’
A logbook you keep in your vehicle is a clas-
Continued from page 35
you choose
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38 JUNE 27, 2022
ACCOUNTING & TAX PLANNING
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