You may not be thinking year-end taxes given that it is only September at the time of this writing, but the end of the year is less than three months away. Making matters worse is the coming holiday season. A month from now you will be starting the busiest retail season of the year. That means you need to start thinking about tax issues now – while you have the time and a clear head.
This isn't to say you need to start working on your taxes right away. You really cannot from a practical standpoint anyway. The point is to start thinking about things. Develop a plan of action so that you're ready to deal with tax issues head-on beginning January 2.
We hope you've done very well as a retailer of fashion sunglasses this year. Having to pay more taxes to account for increased revenues is a good problem to have. And thanks to last year's tax reform bill, this year's tax assessment should be considerably lower for most retailers.
Having said all that, here are a few year-end tax tips for our retailers:
1. Pare Down Your Inventory
As a retailer of fashion sunglasses, you have to keep a certain amount of inventory stocked on your premises. That is part of the retail game. But all that stock has to be accounted for when you or your accountant file your 2018 taxes. If you can pare down that inventory by holding a sale on excess product, you'll have less to account for.
One suggestion is to start planning now for a blowout Christmas and year-end sale. You can marry a pair of sunglasses from your excess inventory with a higher-priced pair from among your most popular lines. Do a BOGO where purchasing the higher-priced pair at regular price gets you the second pair for free. You can move a lot of inventory that way.
2. Be Diligent about Sales Tax
The fourth quarter is a time of year when retailers can get so wrapped up in holiday sales and year-end taxes that they completely forget about sales taxes. This is a definite no-no. Your local and state taxing authorities will not look too kindly on missed sales tax payments. Nor will they accept the busyness of the holiday season as an excuse.
Do yourself a favor and be extra vigilant about sales taxes this time of year. With increased revenues from holiday sales, there are going to be more taxes to collect, report, and pay. Stay on top of it.
3. Start Thinking about Internet Taxes
This last point is not meant to alarm you; it's just to get you thinking about internet sales taxes. If you sell fashion sunglasses outside of your own state via the internet, you've probably never collected and paid sales taxes from customers in other states. That may change beginning in 2019. Thanks to the Supreme Court's Wayfair ruling from earlier in 2018, states can now begin forcing internet retailers to collect sales tax.
It is unlikely that you'll have to start collecting internet sales taxes in 2019, but anything is possible. Legislators in some states may make internet tax legislation a priority following the November elections. By next spring, internet sales tax could be the law of the land in many states. You need to start thinking now about how you might handle such a scenario.
It's been a great year for selling fashion sunglasses. Hopefully your business did well. Assuming it did, take the next few weeks to start thinking about year-end tax issues; 2019 will be here before you know it.