Monthly Archives: August 2013

What Businesses Need to Know About the Looming Internet Taxes

Image of Intelishift Internet services in Ashburn VirginiaThe new Marketplace Fairness Act, or “Internet Tax” will require online retailers to collect sales taxes for the states where they ship goods. If you’re a small business that purchases or ships any of your products online, these new taxes will affect you.

This article covers the basics of the Marketplace Fairness Act, so you can understand how it may impact your bottom line.

Currently, both consumer-level and B2B online shoppers have enjoyed purchasing products online mostly sales tax-free. Older laws required stores to collect sales tax only on goods shipped to states where they have a physical presence, such as a distribution center or a physical store. For example, if you purchased office supplies and software from Office Depot online, you would likely pay sales tax on your purchase. If, on the other hand, you made this purchase on Amazon you might get off scot-free when it came to sales tax.

Complication has been the main reason for not requiring these sales taxes in the past; deciphering all of the various tax laws for all 45 states that have sales tax was just too much of a burden for businesses.

Back in 1992, the Supreme Court addressed the issue, but Internet commerce was non-existent in those days. According to online sales tax advocates, current technology makes it simpler to collect sales taxes from various states. The so-called Marketplace Fairness Act urges state governments to provide companies with free software for calculating taxes and to establish one state entity to receive the payments.

You may be thinking that you’re paying sales tax already, right? In most states with sales tax, consumers who buy products online from another state must pay a Use Tax. They are supposed to track their online purchases and pay sales tax when they file their tax return. However, some consumers are not even aware of—or ignore—these requirements, which are difficult for state jurisdictions to enforce.

Supporters of the Internet Tax include big box retailers like Target, a mix of Democrats and Republicans, President Obama, the National Retail Federation, and even Amazon. While Amazon—as you might guess—was against the new tax for a while, the eCommerce powerhouse has changed its mind as its interest shifts into expanding its physical operations into more states. Apparently, Amazon realized the benefits of providing faster and same-day delivery from increased distribution centers outweigh the risk of requiring customers to pay sales tax.

Opponents include conservatives and anti-tax activists who claim the law will hurt small online businesses. However, one very big online business is leading the charge against the tax. eBay wants to protect its numerous sellers and would like the law to exempt any business that either has fewer than 50 employees or makes less than $10 million a year on out-of-state sales.

No matter which side you’re on, it’s hard to deny the numbers. According to the U.S. Department of Commerce, there were $225.5 billion in online sales in 2012. And, thanks to the current sales tax-free status, states lost a combined $23 billion in uncollected sales tax revenue.

If you live in one of the five states with no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), you’ll get off easy on this one, too. People in these states won’t be charged on goods they have shipped to their home state. However, businesses won’t fare so lucky. They will have to collect sales taxes for items shipped to other places where there are sales taxes—in other words, most of the country.

In states with sales tax, businesses and individual consumers will have to pay the same amount of sales tax as they would buying a product in person at a brick-and-mortar store. You can use this tool to see how much something will cost under the new law by choosing a location and tax category.

The Marketplace Fairness Act is currently pending in the House, and the earliest it could go into effect is October 1, 2013.

Technology Survey Finds that More SMBs Are Moving to The Cloud

Image of the next big thingBusinesses that have historically shied away from cloud-based services are now beginning to change their tune, according to a 2012 technology survey. Despite prior fears about security and the absence of data hosted in-house, a surprising number of SMBs are opting to throw caution to the wind and take advantage of the simplicity and ease-of-use of the cloud.

The bi-annual Spiceworks sponsored State of SMB IT survey polled over 1,400 IT decision makers around the world on trends in technology purchasing and adoption. What they found was that cloud-based services are increasingly being adopted by SMBs, possibly due to their lower capital expenditures and higher adoption rates with employees. Though one common barrier to entry has been the thought that cloud services were difficult to setup and maintain, cloud-based services and apps today have a nearly automatic setup and business managers are realizing that using these services are usually much more simple than a local installation.

While cloud-based services are nothing new, many companies have been slow to adopt due to a perceived risk of data breaching. But, times are changing and according to this study, SMBs are seeing the benefits of moving to the cloud and are doing so in droves. In fact, 48% of SMBs are currently using cloud-based services ranging from document sharing tools like Google Docs to web-hosted email and CRM databases like Salesforce. And while cloud-based data backup is still seeing a slower adoption rate at 25%, it’s still growing year after year and will likely keep picking up speed as the convenience and availability of more cloud-based services increases.

10 Corporate IT Headaches in the Next 5 Years

The Next Big ThingYou may be wondering why anyone would want to read about upcoming corporate IT headaches. With business, knowing what awaits you is the first step to establishing a strategy that overcomes potential problems.

According to Gartner, here are 10 corporate IT headaches businesses will face in the next five years.

  1. IT departments will be held more accountable. According to Gartner, if IT support doesn’t fully demonstrate its usefulness, it will go away. In fact, the IT department’s existence will depend largely on customer satisfaction levels.
  2. Hybrid data centers will become the norm. Companies will not ditch their current infrastructure, yet commodity services will go cloud. Expect to see this hybrid approach applied by businesses of all sizes.
  3. Client server technologies will be a grab bag. Gartner notes that 90% of enterprises will skip Windows 8 altogether.
  4. Virtual appliances will alter the equation. Gartner predicts a move to virtual appliances, leaving physical appliances like Exadata and Netezza with an uncertain future.
  5. Big data will continue to present storage challenges. Managing storage growth and getting a grip on requirements between now and 2015 will be major challenges.
  6. Big data will create a talent shortage. The demand for big data will generate 1 million jobs in the global 1000, but only 1/3 of those positions will be filled.
  7. Negative SaaS experiences will take a toll. Poor service levels will motivate 30% of companies using SaaS will switch to on-premises applications by 2014.
  8. Service providers will be edged out by the competition. Market consolidation will eliminate 20% of the top 100 IT service providers by 2014.
  9. BYOD brings bad news. Employee-owned devices will become compromised by malware at twice the rate of corporate-owned devices.
  10. Virtual data centers change the game. These centers will mean staff shifts and forced innovation because, according to Gartner, the vertical organizations in our current IT world just won’t work going forward.

All of these trends point toward outsourcing. Hosting, colocation, and virtual private servers will play a big part of tomorrow’s IT future. Are you ready?