A measure that was just signed into law by Governor Kay Ivey will provide some reductions in the amount of sales tax that some companies are required to pay.
The amount of paperwork and the number of times each year that small businesses are required to pay their taxes has been significantly reduced thanks to House Bill 77.
In the past, it has been referred to as a headache in terms of administration. Small enterprises with yearly revenue estimates of one million dollars or more were required to make quarterly payments, with the amounts being guessed at each time.
According to Rosemary Elebash, the State Director of the NFIB, “they have literally had to estimate what their sales tax is going to be for the following year,” which means that “they’re guessing.”
Alabama’s new sales tax bill simplifies the process for companies.
They make a mistake, and if they underpay, they are subject to fines and interest; if they overspend, they are required to wait for the Department of Revenue to apply the money to future tax payments.
This threshold has been dramatically enhanced as a result of House Bill 77, which has provided a break for around 75-80 percent of firms.
According to State Representative Danny Garrett, who also serves as chair of the Small Business Commission, “What we did with this most recent bill was increase that threshold from $5,000 to $20,000, which means you have to have $6 million of estimated revenue before you are required to make quarterly estimated sales tax payments.” This information was provided by Mr. Garrett, who is also a member of the Small Business Commission.
In addition to reducing the amount of paperwork that must be completed, the National Federation of Independent Business believes that it will also result in a reduction in prices for some enterprises.
More than 3,000 smaller enterprises will no longer be required to pay that monthly tax as a result of the threshold being raised to $20,000. They will have the option to determine whether they wish to perform the task on a quarterly, semi-annual, or annual basis, as stated by Elebash.
The purpose of the Small Business Commission is to identify effective methods to advocate for the state’s small businesses, which are an essential component of the state’s economy.
“For the past few years, we’ve been trying to find bills that will make it easier for small businesses because approximately 80% of our citizens in Alabama either work for, own, or are connected with a small business in some way, and so they’re kind of like the backbone of our society,” Garrett said. “Because of this, we’ve been trying to find bills that will make it easier for small businesses.”
On October 1 of this year, which is also the first day of the next fiscal year in Alabama, House Bill 77 will become law and go into effect.
