Ask the Expert: How can I advise my clients on their path to carbon neutrality?

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As I reflect on my time in this industry, the first thing I must acknowledge is that education has served as a key ingredient to my success and the success of those I support. You see, I didn’t go to school to get my accounting degree. I learned accounting through a series of training and certification programs, business mentorships, and on-the-job training. All my experiences in the world of accounting, from my earliest days helping people access job opportunities to my work today mentoring artists, have shown me that the most valuable thing we can do as accountants is teach our clients to fish. This means empowering them to overcome their own business challenges by mastering their finances while simultaneously joining them to create a tide that will raise all ships.

Today, however, I find myself at a crossroads. The wrong tides have risen in recent years, and we now find ourselves in a true environmental emergency: the climate crisis. As such, I see my work—our work, as a profession and as a people—shifting. We must become accountable to more than just the numbers floating on our financial statements. We need to focus on something way more important: our Earth, and all its inhabitants.

When it comes to addressing climate change, it’s important to understand that action needs to be taken today and every day going forward. Each and every one of us is responsible for the Earth’s well-being, and it will take all of us striving together to reduce our carbon footprint and slow down the worrisome changes in our climate.

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I understand that this topic can be daunting, especially when we put this problem in the context of a global crisis requiring global effort. But the fact is, it all begins with simple steps that we can take as individuals. By affecting our own personal transformation—by examining the beliefs we hold and the behaviors we engage in that negatively impact the environment—we encourage the people around us to change their practices, too. It’s this collective, interdependent action that has the potential to make a real difference.

Lead by example. It all begins with what you choose to do on a day-to-day basis.

How does the journey toward carbon neutrality really begin? Well, it starts with education. To understand the problems we’re facing, you’ll need to understand how your unique talents as an accounting professional fit into the bigger picture. There are many places you can start as you begin to inform yourself about all this, but you might want to consider the educational resources of the Pachamama Alliance, a nonprofit with a mission “to educate and inspire individuals everywhere to bring forth a thriving, just and sustainable world.”

As you dive into educating yourself, it’s important to find like-inspired individuals who will support you on your journey. You’ll want to find people that will hold you accountable for changing your own beliefs and behaviors, lifting the mirror to your blind spots and guiding you down a path toward positive social and global impact.

On an individual level, it is important to be intentional in your daily practices. Remember that each day is an opportunity to do something that helps reduce your carbon footprint. Prioritizing video calls over driving or flying to meetings, turning off the air conditioner at the office, or unplugging electronics when you’re on vacation can make a huge difference.

But don’t limit yourself to a small handful of work-related adjustments and call it good enough. Instead, continue working toward maximizing the number of things you do in your own home that align with creating a sustainable future.

For example, do you buy products that are reusable? Are you taking short showers and only doing full loads of laundry as needed? Are you composting your food waste? What about exploring solar panels for your home or planting a garden to source your own fruits and vegetables? Perhaps, if you have the space, you could even try raising your own goats, chickens or bunnies to disrupt the extractive food supply industries. The list of opportunities to adjust your lifestyle is practically endless. Make it your family’s mission to be all in, 100% of the time, for the environment.

Beyond the changes you make in your personal and professional spaces, consider volunteering and/or making donations to charities that plant trees, conserve rainforests and advocate for environmental protections. As much as we’re able to reduce our own carbon emissions, we also need to support efforts that actually offset emissions.

Be the leader the Earth needs to thrive. Take action with the people around you.

Once you’ve done the best you can to shift your lifestyle, it’s time to consider the influence you have on your team and your clients. If you have a staff or you’re the climate advocate in your office, empower your colleagues to be part of the solution. Chances are, if you’ve begun taking concerted steps toward carbon neutrality in your own life, others have already taken note. People appreciate examples they can follow. Rally your supporters and collaborate with them on initiatives in and outside the office.

One way to do this is by facilitating a book club with your coworkers on books like Lynn Twist’s “The Soul of Money” or Charles Eisenstein’s “Sacred Economics.” You could also invite your teammates to conduct industry research on what other firms are doing to effect positive social transformation. Once you have this information in hand, make it a priority to share those insights with your whole company (a monthly, internal newsletter would be a good avenue for this). Again, remember that education is at the heart of this transformation. There’s no point in reinventing the wheel. All we need to do is open our minds and build upon the work that has already been done.

Understand that not everyone will progress at the same pace on this journey. When talking with colleagues who are struggling to change their attitudes and beliefs, aim to be kind, compassionate and consistent in your approach. Many of the unsustainable practices we’re engaged in today have gone on for multiple generations. For some, breaking those habits can be difficult—even painful. With this in mind, if you’re in a leadership position, offer coaching, hire experts and figure out what resources are needed to ensure that your whole team can be an example for your clients and your community at large.

You, as an accountant, play an essential role in addressing climate change!

When it comes to working with your clients, again, it’s about leading by example. Model the behavior of what we at the Accounting Alchemy Network call a “regenerative accountant,” one that prioritizes the environment as a key stakeholder and expresses a passion for more than profit when finances are being discussed.

Remember that part of your job as a strategic advisor is putting forth the tough questions and holding CEOs accountable. So ask: “Are they reducing electricity consumption? Are they decreasing spending on things that are extractive of the Earth’s resources? Is their sourcing of goods and services ethical and aligned with the values of carbon reduction?” If the answer to any of these questions is no, bring your concerns forward when talking about the performance of their business and encourage them to consider another way.

I understand that some clients may not welcome these conversations at first. When you encounter resistance, remember that persistence is key and we need to start somewhere. Ultimately, it’s important to set the tone that “good business” is good for business. Direct your client’s attention to possible data points beyond what’s being tracked in their accounting system. Help your clients see the bigger picture and connect the dots by introducing them to ideas like measuring their carbon footprint and ESG reporting.

Do not underestimate your innate superpowers as an accounting professional. Your history of serving as a trusted advisor means you have the ears of your clients, and your ability to evaluate financial operations and provide auditing and technical oversight against a set of standards means you are uniquely skilled to provide advisory services in the realm of sustainable business practices.

Accountants hold the key to helping businesses achieve carbon neutrality.

Bottom line: The journey begins with you! As I referenced earlier, education is everything. You must be well-informed so you can show up in the world in a way that inspires others. Embrace personal transformation. Let your light shine bright for the sake of Mother Earth.

If you want to take action right away, do some of the things I mentioned in this article. Then, get all your friends, family, colleagues and clients to do the same. Though the hard data isn’t always easily measurable, these things make a difference. We know we need everyone “on the job”—today, tomorrow and every day going forward. The Earth is hiring, and the pay is boundless! But if we don’t act now, the costs will be catastrophic.

Thank you for taking the time to read this article. If you’re inspired, please share it on social media or pass it along to someone in your network. Even the simple act of sharing an article like this can cause a ripple effect that gives the Earth just one more point for the win. Go out and do good, my fellow accountants!

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This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.

 

 

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Top 10 sales tax strategies for small businesses

 

Many of us dream of running our own business and when we act on that dream, the life of joy we envisioned can quickly turn to pain if we fail to adjust to ever-changing tax requirements. Some of the more recent tax changes apply to simple sales tax, which becomes not so simple for those with a sizeable number of online sales or high dollar amount of online sales in multiple states. If this is your business scenario, the following 10 strategies for dealing with sales and other business taxes will help you maintain or bring back the joy of running your own company.

 

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In the past, retailers typically needed to register, calculate, collect, and report sales tax in jurisdictions only where their business had a physical presence. This presence provided the minimum connection, or nexus, needed for a state or local to require tax registration, collection and reporting from retailers. The 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, 585 U.S. ___ (2018), however, broadened nexus to include economic presence and immediately triggered other states to enact or begin to enforce their own economic nexus laws. For a current list of economic nexus laws, by state, see the Supreme Court Tax Decision – Online Tax Laws by State. In reviewing the article, you may notice that many states base their new economic threshold on the:

  • dollar amount of sales or number of transactions; or
  • dollar amount of sales and number of transactions

To complicate the matter even more, the definition of “sale” is not uniform among the states, and can vary between gross, retail, or taxable sales.

Business license tax

New jurisdictional sales tax responsibilities may also trigger new Business License Tax liabilities, albeit often low dollar. Nonetheless, not understanding your tax requirements can create administrative headaches and detract you from focusing on your true passion, your business. When dealing with a tax agency directly to understand your sales and other business tax obligations it is often best practice to request the agent direct you to the written guidance on the revenue agency website to help avoid any misunderstanding or miss-guidance.

 

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In light of the Wayfair ruling, many states have enacted, or are in the process of enacting, new rules with regard to Marketplace Facilitators. Make sure your facilitator agreements stay compliant with these tax changes.

1099-K impact

Sales via a Marketplace Facilitator may result in the facilitator issuing you a Form 1099-K, reporting gross payments received from the facilitator on qualifying sales. If facilitators are responsible for reporting and paying sales tax on your sales via their online portals then make sure the 1099-K received is not overstating your income by the amount of this tax. If it is, then request an amended 1099-K. Otherwise, you could be stuck with the mess of having to reconcile your 1099-K reported income with a tax agency.

 

 

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Whether you are the business owner or only deal with the accounting and tax issues for the company, you should always understand what it is the business is selling in relation to the sales tax rules. Sometimes, what you think is exempt might actually be taxable, depending on the jurisdiction. If you provide a service along with the sale of goods, the service may be included in the tax base but may be exempt when provided alone. The key, know what you are selling and check your state(s) taxability rules to avoid any audit assessments down the road.

Sales tax calculator

Even if you sell standard taxable goods, for multi-state sellers it can be overwhelming to keep up with sales tax rate changes that are constantly happening throughout the US. To ease this burden, consider using a reputable sales tax calculator (including our sales tax calculator), which provides current sales tax rates for all of the more than 10,500 US state and local taxing jurisdictions.

 

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Not all sales that qualify for an exemption are exempt on their face. Often, exemptions apply based on the buyer (e.g. non-profit) or the intended use of the goods sold (e.g. resale). To support an exemption in these instances, a seller must obtain a properly completed exemption certificate from the buyer. Trouble arises when something about the certificate is wrong or the exemption period listed on the certificate has expired. If you have exempt sales based on receipt of a properly completed exemption certificate, you must create a process for storing the certificates and, prior to exempting any sales based on a certificate, make sure the certificate provided is one the applicable state will accept. Otherwise, you could be stuck paying for uncollected tax, plus any penalties and interest imposed by the state.

 

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Sometimes small businesses purchase goods for use in their business without paying any tax. If this is you, remember that there might be an obligation to self-assess use tax on the purchase. Continued failure to report use tax by small businesses may trigger an audit. The key to avoid mishap is to set-up a process to catch and report applicable use tax on purchases.

Personal property tax

Align the process for use tax accrual with any state/local Personal Property Tax compliance, if applicable, to help with tax abatement and filing deadlines.

 

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When a business registers to collect and report sales and use tax, the tax authority provides a notice to the business of the proper filing frequency and will issue notices per tax type if a jurisdiction treats tax types differently (IE: sales or use tax).

Filing frequency

The filing frequency defines when tax must be reported and paid to the tax authority. It is usually based on revenue and typically set to monthly, with tax due on or before the 20th of the month following the period reported. For example, an October monthly return may be due on or before November 20. 24 States have worked to unify their filing rules under the Streamlined Sales Tax (SST) and require monthly filing, but those filing rules only apply to certain sellers. The key here is to remember that every tax jurisdiction has its own filing frequency thresholds and your initially assigned frequency can change.

Tax type considerations

Many states, like Massachusetts, administer tax on sales the same way regardless of where the sale originated. Further, if a business needs to self-assess use tax on purchases, that tax is often also reported on the sales tax return. Some states, however, differentiate tax administration by tax types:

  • Sales tax – intra-state sales; occurring within a state;
  • Seller’s use or vendor’s use tax – inter-state sales; occurring between states;
  • Consumer’s use tax – on purchases for which tax was not properly paid.

Jurisdictions with tax type distinctions typically require separate registration and reporting, per tax type. Even when businesses report different tax types on the same return, they must make sure to report each tax type on a separate line. Reporting for the correct tax types every month, in every state always helps small businesses minimize out-of-pocket tax expenses.

 

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More and more states are moving from paper to an electronic process for reporting and paying sales tax. Make sure to follow these e-requirements or states may assess penalties, even on zero-dollar returns.

Also, remember that states can make mistakes or have technical “glitches.” Save your online confirmations, as well as proofs of mailing and cancelled checks related to paper submissions, so that if there is a mistake, you can use that proof to eliminate penalty or interest assessed for late submissions.

 

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Many states offer a collection allowance or timely-file discount, regardless of whether filing returns electronically or by paper. When a discount is available, claim it. There is no point in leaving money on the table. When claiming discounts, however, be careful that your business is reporting under the correct tax type because not all jurisdictions allow a discount for every tax type.

 

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How can small businesses keep track of filing frequency and due dates in every jurisdiction where they are required to report, especially as that number grows? One way is to set calendar reminders, including special rules for payments. If filing by mail, it is important to note which jurisdictions treat the return and payment timely if postmarked on or before the due date or measure timeliness based on the receipt date, an issue common for Alaska locals, for example.

 

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Small businesses never want to miss a DOR notice or fail to timely act on a notice as required, especially an audit notice. If you have an online DOR sales/use tax account, make sure your business name, address, phone and email are current. If you authorize the DOR to send notices via the online account, set-up a process to also receive hard copies, by mail. Once you get a notice, read it and respond in accordance with the instructions and timelines contained in the notice.

 

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As your business grows in the e-commerce market, things can get very complicated and hard to keep track of for small businesses. Consider these 10 strategies for dealing with sales tax and a few other business taxes. It will help you retain or bring back the joy of running your own company. You can also consider the use of an automated sales tax solution such as QuickBooks Sales Tax to help manage the nuances of sales tax laws, reduce the risk of error, and minimize the likelihood of a sales tax audit.

This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.

 

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