With issues like construction, financial services, and e-commerce, corporate tax accounting is rapidly becoming more complicated, but a few industries are at the top of the list for dealing with these complexities. Each of these industries deals with cross-border commerce, reporting challenges, and the constant need to respond to and comply with new regulations. But despite their similarities, each one of these industries has their own unique difficulties to contend with.
The construction industry has to consider how best to report its revenue by choosing either a completed contract method, accrual basis, or percentage of completion method. Furthermore, those in construction may not know whether they are considered a person or entity, since these definitions are ever changing. In the United States, each state has its own requirements for 1099 reporting, and when making bids, a construction company must consider whether taxes are levied on an individual basis or on an entity basis for such businesses. If a state requires individual filing, then more questions arise, like whether the business needs to begin filing within that state. In addition, it could also be that a composite return on each owner’s behalf can be filed.
Many corporate tax accounting issues facing the financial services industry are the direct result of changes in regulatory policies and legislation. As with the concerns in taxation for the construction industry, additional requirements have had an effect on accountancy for companies in financial services. For example, the Emergency Economic Stabilization Act of 2008 makes it mandatory to report the sale of securities, the tax basis of a business, and whether mutual fund companies, transfer agents, and custodians are reporting gains or losses on a short-term or long-term basis.
E-commerce may present the most challenges in tax-related accounting for businesses because it is hard to apply the principle of permanent establishment due to the fact that it is unclear when or where a physical presence is established. Furthermore, its difficult to know who is liable for tax reporting. E-commerce transactions are conducted both over state lines and over international borders, and each state and country has its own ways to determine taxation rates and tax categorization.
Navigating the constantly changing corporate tax accounting landscape can make anyone’s head spin. Companies like KPMG are experts in this field and provide considerable assistance. It is essential to be informed about compliance and other taxation issues for commerce. Currently, Big4.com, a website focused solely on available positions at the Big Four accounting firms, lists 300+ job openings for KPMG.