If you are in Ohio, you should be aware that Gov. Kasich's budget plan includes a massive expansion of the sales tax. If his budget passes, you will be required to collect and remit sales tax monthly for your services. You will be required to pay the tax when invoice your customer - BEFORE you get paid. If the client doesn't pay the invoice, you will have to file a form asking for a refund.
So, if your client pays you NET60 or NET90, you will not only be carrying your client, but you will have to advance the sales tax as well.
Not only will this be a significant burden - tracking and filling out monthly reports - but you will also find that Kasich's plan makes nearly all services subject to sales tax. There are exceptions for things like education and medical expenses, some consumer insurance transaction, and residential rent, but everything else you currently pay will likely cost you an extra 6 or 7%! You will pay sales tax on accounting services, legal services, commercial rent, etc.
The only good news is that the Gov. is planning to phase in a 50% income tax cut on small businesses. However, the Ohio income tax rates are not much as it is - the top bracket on income over $204,200 is only 5.92%. Thus, you will likely spend more on new sales taxes than you save in Ohio income tax.
As for what this will do to the real estate market in Ohio, the sales tax will also be applied to Realtor commissions, home inspections, home warranties, closing fees, loan broker fees, etc. These new taxes will likely have a stifling effect on purchasers ability to purchase a home.
Best,
Robert A. Franco
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