Workshop helps taxpayers

By Donna Riley-Lein
Independent Staff Writer
Posted 4/6/09

ROBERTSDALE, Ala. — OK, you have a good idea for a better mousetrap. You’ve started making them in your spare time, and now it’s time to open up and watch the world beat a path to you door.

Not so fast.

With apologies to Ralph Waldo …

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Workshop helps taxpayers

Posted

ROBERTSDALE, Ala. — OK, you have a good idea for a better mousetrap. You’ve started making them in your spare time, and now it’s time to open up and watch the world beat a path to you door.

Not so fast.

With apologies to Ralph Waldo Emerson, there are a few more steps a potential Baldwin County business owner should take before opening up that mousetrap operation.

There’s a business license to get, a tax account to set up, maybe learning to use the electronic filing Web site, discounts to earn, and many more topics to learn.

If you aren’t familiar with the system, it can be confusing. Depending on exactly what the business is and does, it will have to file paperwork with the state, county and possibly city where it has a presence.

Confusing is an understatement. Mousetraps are easy by comparison.

That’s why the Baldwin County Sales and Use Tax Department held a “Taxpayer Workshop” at the Baldwin County Central Annex March 17. The department plans to hold workshops quarterly. The schedule is June 15, Sept. 15 and Dec. 15. The sessions begin at 5 and run to 7 p.m.

Getting a few answers was on Cheryl Morrow’s mind.

“That’s why we are here,” said Morrow.

Morrow and her husband, Perry, of Robertsdale were at the March meeting, ready with questions. The couple has launched a new business, “Things Remembered Once Again,” that sells secondhand treasures at flea markets in the area.

The Morrows have all their paperwork in order, they believe, but Perry said, “We want to ask questions and make sure that we are doing things correctly. We are new to business.”

One of the things that might trip up the Morrows up is the need to keep goods for sale and personal goods “separate.”

While Cheryl says she does her best to keep her personal goods and things accumulated for the business apart, it can be hard, especially with things she’s purchased over the years and is now trying to sell.

That’s one of the things members of the panel say tax auditors look for. “Getting all the paperwork is the most challenging aspect of setting up a new business, said Thomas E. Whitacre, a Senior Auditor with the Sales and Use Tax Audit Division.

“We’re the short version of the IRS,” joked Whitacre. “We make you feel all warm and fuzzy.”

Jokes aside, Whitacre and the other presenters made it clear that a person starting a business should ask for help, first from their own professional, a Certified Public Accountant or attorney well-versed in business matters and then from the Sales and Use Tax Department.

“One of the first decisions you have to make is what kind of business entity you are going to have,” said Whitacre.

There are a great number of ways a company can be organized, ranging form the simple “sole proprietorship” to a more exotic “limited lability corporation” that Whitacre says came into vogue in the 1980s.

There are advantages and disadvantages to each type of company, and Whitacre urged the attendees to consult an attorney to determine “the best structure for you.”

“We are here to assist you,” said Whitacre, adding that the staff in the Sales and Use Tax Department would rather “answer questions early” than have to dredge through many years of tax documents.

The stakes are high on collecting taxes, Whitacre said. A goodly percentage of the sales and use taxes collected in Baldwin County go to support public schools.

And while the seminar focused on businesses, consumers are not off the hook, especially with the “consumer use tax” charged on Internet sales.

“There’s a line for that on your state tax form,” Whitacre said.

Whitacre said the state of Alabama keeps a team of auditors on staff that checks the books of companies known to ship goods into Alabama, looking to see if the appropriate tax has been paid.

“You don’t get something for nothing,” said Whitacre.