Operating a business is hard – but running a small business can be much harder than a larger one. Why? Because with a large company, there are usually several employees, managers, and executives in place to prevent anything too bad from happening – and safeguards to prevent the bad from getting really bad.
Unfortunately, the same cannot be said for small business –where one person might be wearing 1, 2, 3 or more hats to keep the business going. And, when money gets tight and payroll must be met, employers sometimes make the mistake of using the collected sales tax for internal operations. It would seem to make sense, “The money is here and I will replace it as soon as I can.” BUT, this should never, ever be an option any small business considers when it comes to a tight month.
Trust me, do NOT do this. The sales tax you collected is NOT YOUR MONEY. It belongs to the State of California and you MUST see it that way. Even if it means the difference between staying in, and going out of business, that money can not be touched. It must be deposited in accordance with the sales tax business tax return.
If your company re-allocated this money for payroll or any other non sales-tax depositing purpose, it is crucial that it be resolved immediately. And, because willfully taking the sales tax money can be considered a crime, it is in your best interest to speak with an experienced tax attorney before taking any action with the BOE.
SEAN M. GOLDING, ESQ, EA
Sean M. Golding is one of only a few attorneys licensed in both New York & California and has accumulated 15 years of legal experience. He is also an Enrolled Agent, the highest credential awarded by the IRS. He represents clients worldwide in matters involving Civil & Criminal Tax, Probate, Estate Planning, and International Law. Sean’s clients include U.S. and foreign citizens living throughout the states, as well as abroad. Past and current clients reside in Iraq, Japan, Afghanistan, Indonesia, South Africa, Morocco, India, Pakistan, Taiwan, Nicaragua, Switzerland, Canada, Mexico, Philippines, Hong Kong, and Korea. Sean is currently enrolled in one of the nation’s Top Master of Tax Law Programs at the University of Denver in a distance program designed for experienced professionals. He worked his way through school, graduating University of Denver and Whittier Law School and earning Dean’s List distinction at both institutions. He is a Partner in the law firm of Golding & Golding (http://www.GoldingLawyers.com).