Online Sales Tax

 I am frequently asked by small business owners what their responsibility is as to collecting sales tax from purchases generated by their websites. An online presence is different from a bricks and mortar storefront, and business owners may suddenly find themselves fulfilling orders for customers located across the country.

The short answer to this question is that if your business has a physical presence in a state, then you must collect local and state sales tax for that location. Examples of physical presences are an actual store, office, or warehouse. If your business does not have a physical presence in a state, then you do not have to collect sales tax for that state.

This rule is based on Quill v. North Dakota, a Supreme Court case that said mail-order businesses cannot be required to collect sales tax in a state unless the business has a physical presence there, as the burden on the sellers to comply with all state and local tax jurisdictions is too complex to manage and would strain interstate commerce. 504 US 298 (1992).

That being said, tax laws change all the time. If you are a small business owner looking to establish an online storefront, you should consult with your state's revenue agency to determine if you do have what is considered a physical presence. Additionally, the U.S. Small Business Administration is a great resource for answering questions about online payment services and sales.

Maryland grocery stores and liquor sales

From the Baltimore Sun: Groceries seeking ways around wine sales ban

Maryland Bans Employers from Requesting Social Media Passwords

From Gizmodo: http://gizmodo.com/5900609/maryland-bans-employers-from-requesting-social-media-passwords-good-job-maryland

Wine - To Go?

From the Baltimore Sun, a follow up article to their previous article about growler sales in Howard County: Wine-to-go containers added to bill allowing 'growler' sales in Howard Co.

hocoblogs Party

hocoblogs is having a party on Monday, February 13, 2012 from 6-8 pm at The Corner Stable, in Kings Contrivance, to celebrate social media week. Attendees can register here.

Growlers

From the Baltimore Sun: City, Howard Co. weighing expansion of growler beer sales

Farmers disagree over proposal to relax zoning rules for pick-your-own operations

From Explore Howard: Farmers disagree over proposal to relax zoning rules for pick-your-own operations

On Route 40, Latin Market's liquor application gives hope, draws critics

From Explore Howard: On Route 40, Latin Market's liquor application gives hope, draws critics

Howard County Board of Appeals approves farm use as wedding venue

The Howard County Board of Appeals approve the use of a farm on Jennings Chapel Road as a wedding venue and antiques store

Ipad Apps for Lawyers

I was recently gifted an iPad 2, an item with which I am mildly in love. I have discovered a few apps which I am using regularly in my law practice. Since I have had so many people ask about the utility of tablets in the practice of law, I thought I would blog about my favorite apps. I should preface this list with the statement that I have not paid for a single app - every app on this list was free (legally) when I downloaded it.

Blogger - Blogger is the Google blogging software that Taylor Legal uses to publish our blog. The Blogger app lets me quickly post from my iPad. The app was designed for functionality with an iPhone, so it can be a bit cumbersome to write long posts. This app is best for short posts, such as an individual link to a news article.

Constitution - Constitution is simply a copy of the US Constitution in an easy to navigate format. Each section is accessible individually, and notes are included detailing information on clauses and amendments, as well as historical notes relating to ratification. Additionally, the app features short biographies on each signer of the Constitution.

Dragon Dictation - Dragon Dictation records speech to text. The program does a fairly good job of accurately recording notes. Punctuation can be included by speaking common phrases such as "question mark" or "dollar sign".

Dictionary - Dictionary.com in an app. This is great for when you just can not break out the old Rand McNally - or when you have been challenged in a game of Scrabble.

Dropbox - The Dropbox app links to your Dropbox account that remotely stores files. This allows access to your documents while you are out of the office.

Evernote - Evernote stores notes, links, pics, and the like and syncs with all the devices that have the program installed on it. One useful feature of Evernote is that the program automatically converts printed or handwritten text in images so that it is searchable.

Fastcase - Fastcase's app provides free access to items in it's law library.

iTranslate - iTranslate is a program that will convert text from one language to another. Additionally, it has a speech to text feature.

LawStack - LawStack provides quick access to the Federal Rules for Appellate Procedure, Federal Rules of Bankruptcy Procedure, Federal Rules of Civil Procedure, Federal Rules of Criminal Procedure, and the Federal Rules of Evidence.

WestlawNext - WestlawNext provides access to Westlaw via my account.

Innovations in Wellness Awards

In October, Healthy Howard, Inc., certified 46 local businesses as "Healthy Workplaces". "The Healthy Workplaces program, a part of the County’s overall Healthy Howard Initiative, certifies county businesses that meet specific criteria in six main areas of worksite wellness-physical activity, mental health, environmental health,nutrition, safety and culture of wellness."

Just this past week, Healthy Howard awarded Tower Federal Credit Union and Verizon Wireless for their innovations in wellness. The program awarded $500 to businesses from three categories: small, medium, and large. Businesses that wanted to highlight specific policies designed to benefit the overall health of their workplaces were encouraged to apply for their Innovation Award. The Howard County website lists the benefits of being a member of Healthy Howard as including:

• Public recognition of membership in Healthy Howard from the Health Department
• Increasing employee morale by committing to their well-being
• Eligibility to win an Innovations in Wellness Award
• Business listed in print, and in online publicity
• Healthy Workplaces plaque for display
• Worksite wellness-related newsletters and resources from the Health Department
• Health Department support of efforts and plans for activities and policy development
• Improved employee health and productivity resulting in cost savings

The website also provides a toolkit for initiating healthy workplace policies, a manual for assessing your business's policies, and a list of healthy alternatives for workplace vending machines.

Changes to Howard County Alcohol Regulations?

From ExploreHoward.com: Liquor board weighs changes to county alcohol regulations

Zoning and the Residential Business

Earlier in the month, Katherine Taylor posted to our blog an article from the Small Business Association (SBA) which highlighted some of the difficulties that residential – i.e. home based – businesses face. The SBA estimates that up to 50% of small businesses are run out of a person's home. With the increasing use of internet tools, such as video-conferencing and online faxing services, those with an entrepreneurial spirit can easily jump-start a company from their garage.  Additionally, with larger businesses employing furlough days and flex-time, traditional corporate work is being performed at home.

Having a home based businesses is not without it's challenges. Zoning laws for home based businesses are often very stringent. The SBA notes that zoning codes frequently prohibit signs, vehicles of certain classes, exterior improvements relating to the business, and outdoor storage. Additionally, zoning codes can limit the number of employees of a home based business and the number of visitors.

In Howard County, there are a few very specific zoning regulations (opens a .pdf) that a home based business should be aware of:

• The home-based business can't occupy more than 33% of the gross floor area of the dwelling OR 800 square feet, whichever is less;
• The business owner can't have clients visit in a detached garage;
• There can be no exterior evidence of the business;
• Only certain occupations are allowed to conduct home-based businesses.

While this is by no means a comprehensive list, it gives a general idea of the difficulties faced by a potential business owner seeking to establish their business out of their home. Some of the regulations are very sensible - let's face it, no one wants a semi-truck rolling up their street at three in the morning so the neighbor can get the latest shipment of widgets; however, in an economy that is not based on manufacturing but on intellectual products, home based businesses are likely to have little impact on the residential characteristics of the neighborhood.

For those looking to start a residential business, the SBA does have a great page on establishing a home based business.

Benefit Corporations, Benefit LLCs, and Marketing

In June, Maryland saw the creation of America's first benefit LLC, Clean Currents, a green energy company. Clean Currents was created under the recently passed SB 595, a follow up to the state's benefit corporation law passed last year. SB 595 was sponsored by State Senator Jamie B. Raskin (D-Mont).

Two weeks ago, Governor Martin O'Malley attended the inauguration of Blessed Coffee, a Takoma Park coffee shop. Blessed Coffee is a registered benefit corporation under the law passed last year. The company has pledged to allocate 50% of its net profits from wholesale revenue to social programs in Ethiopia's coffee growing regions, and 50% to community based organizations. O'Malley said of Blessed Coffee that “(i)t's a corporation that looks at not only the bottom line of profit, but also the bottom line of social responsibility.”

The Washington Post article, Takoma Park coffee firm holds 'Blessed' event, in quoting Raskin highlights one of the challenges the state has in encouraging benefit corporations:

“'The law allows community-minded companies to take the high bid,'    Raskin said.

The main benefit of the law, however, is as a branding and marketing tool. The community feels that it's a part of the business, and people are often willing to pay for products when they know the money goes toward groups and causes they support, Raskin said.” (sic)

Cause marketing can be effective. A 2010 study said that 41% of Americans have purchased a product in the past year because the product was associated with either a social or environmental cause. The same study said that 88% of Americans think it is acceptable for a company to involve a cause or issue in its marketing; contrast this to the Millenial Americans, of whom 94% think it is acceptable for a company to involve a cause or issue in its marketing. Additionally, Millenials use a company's support of social or environmental issues to determine other corporate interactions. 87% of Millenials use social and environmental causes as a benchmark to determine where to work. 79% of Millenials use the same benchmark to determine where to invest. As Millenials become more active participants in the marketplace, benefit corporations and benefit LLCs are poised to reap the benefits (pun intended).

Purpose driven profits

Howard Magazine has a great article in it's September 2011 edition on local businesses with purpose driven profits.

Women-Owned Small Business Federal Contract Program

The Women-Owned Small Business Federal Contract Program was created to allow equal access to federal contracts by women-owned small businesses (WOSBs), and to economically disadvantaged women-owned small businesses (EDWOSBs). This program allows contracting agencies to set aside certain federal contracts for WOSBs and EDWOSBS. Businesses who want to participate in the program must register with the Business Partner Network. The business must have a Data Universal Numbering Systems (DUNS), which is provided by Dun & Bradstreet; a Tax Identification Number; and data on the business, including the number of employees and basic accounting.

A business must satisfy certain criteria to be eligible for the program. In addition to being within one of approved North American Industry Classification Systems codes (opens a spreadsheet), the business must meet certain ownership and control standards, set forth below:

	WOSB	EDWOSB
Ownership	At least 51% unconditional and direct ownership by women	At least 51% unconditional and direct ownership by women
Control	At least 51% unconditional and direct control by women	At least 51% unconditional and direct control by women
Size	Small	Small
Operations	A woman must manage day-to-day operations, make long term decisions for the business, hold the highest officer position, and work at the business full-time during working hours	A woman must manage day-to-day operations, make long term decisions for the business, hold the highest officer position, and work at the business full-time during working hours
Economics	No limit	The woman in charge of operations must have a personal net worth of less than $750,000, with an AGI of less than $350,000 over the last three years prior to certification, and a FMV of all assets of less than $6,000,000.

A business can either self-certify, or be certified by one of four groups recognizd by the U.S. Small Business Administration. The four groups are the El Paso Hispanic Chamber of Commerce, the National Women Business Owners Corporation, The US Women's Chamber of Commerce, and the Women's Business Enterprise National Council.

The WOSB Federal Contracting Program is important to Howard County because of the proximity of Ft. Meade. Under the Base Realignment and Closure Act (BRAC), Howard County expects Ft. Meade to gain 22,000 new jobs. Local businesses can benefit by participating in federal contracting opportunities associated with the base.

If you have any questions about how either the WOSB program or BRAC can benefit your business, please feel free to contact our office.