Crafting Confidence in Gross Receipts Tax Management: Your Guide to NM TAP

As a Navajo silversmith, your art is a bridge between traditional craftsmanship and modern entrepreneurship. Your pieces tell a story—of culture, of heritage, of painstaking attention to detail. But there’s another narrative that often goes untold: the story of managing the financial threads that weave through your business. And at the heart of this narrative is understanding New Mexico’s Taxpayer Access Point (TAP).

Navigating gross receipts tax obligations can be as complex as the most intricate designs in your silverwork. For you, the artist, the Gross Receipts Tax (GRT) is a vital aspect that can’t be ignored. It’s not just about what you owe; it’s about safeguarding your hard-earned income from unexpected demands. That’s where TAP comes in—a digital ally that simplifies your tax life.

But why is TAP essential, and how can it protect you from the tax troubles that too many artisans face? It’s not merely a filing system; it’s your financial defense, a way to declare and manage your dues seamlessly. With TAP, you can ensure that all your wholesale transactions are duly noted, avoiding the common nightmare of hefty tax bills that shouldn’t exist in the first place.

In this guide, we’ll walk you through the TAP system, step by step. From setting up your account to understanding when and how to report, we’ll equip you with the knowledge to turn this tool into your fiscal shield. So let’s embark on this journey of financial empowerment together, ensuring that the only surprises you encounter are the smiles of delight when your customers behold your creations. First, lets read about a common story that has probably happened to someone you know.

 

Fictional Case Study:

John came to Jason Arsenault CPA, LLC, with a letter he received from New Mexico Taxation and Revenue Department. It showed an amount owed gross receipts taxes over $17,000. All of these sales had been to wholesale buyers, but New Mexico Taxation and Revenue Department didn’t know that. Overwhelmed by the prospect of proving years of sales were exempt from GRT. Jason’s firm took a systematic approach to address the challenge:

1. Documentation Gathering:
   • Jason’s team worked with John to contact his wholesale buyers, securing signed Non-Taxable Transaction Certificates and gathering any available records of past sales.
2. TAP Account Creation and Training:
   • They assisted John in setting up his TAP account, guiding him through the process of filing amended returns to correctly reflect his wholesale transactions.
3. Educational Support:
   • Jason provided John with training on maintaining his TAP account, emphasizing the importance of timely reporting and documentation.
4. Ongoing Consultation:
   • They set up a system for John to send digital copies of all sales and purchase invoices, using a mobile app for immediate capture and categorization.
5. Liaison with the State:
   • Acting as John’s representative, Jason’s firm negotiated with the state tax authorities, using the newly organized records to correct John’s tax filings.
6. Preventive Measures:
   • They implemented procedures for John to collect NTTCs at the point of sale and report his gross receipts and deductions accurately and on time.

The Outcome:

With the help of Jason Arsenault CPA, LLC, John was able to rectify his tax situation, significantly reducing his liability. More importantly, he now had a system and the knowledge to manage his tax obligations proactively. After resolving his immediate tax issue, John realized he needed a sustainable solution to manage his business finances. He was spending too much time scrambling for receipts and worrying about taxes, which took away from his craft and family.

The Solution was a Monthly Service:

Jason Arsenault CPA, LLC introduced John to their monthly financial management service tailored for silversmiths and artists in the Four Corners area.

1. Personalized TAP Account Setup:
   • Jason’s team not only set up John’s TAP account but also took care of all his filings. They scheduled regular check-ins to make sure that everything was being reported properly.
2. Real-Time Expense and Income Tracking with Liscio:
   • They implemented Liscio, an app that allows John to text transaction details directly to Jason’s team. This meant that expenses and income were recorded as they occurred, with no need to keep physical receipts.
3. Ongoing Financial Oversight:
   • The monthly service included regular reviews of John’s financial transactions, ensuring that everything was accounted for and that John had a clear understanding of his financial position.
4. Proactive Tax Planning:
   • Jason’s team used the real-time data to provide proactive tax planning, helping John take advantage of all possible deductions and avoid any surprises come tax season. This service was included in his monthly fee.
5. Education and Empowerment:
   • John received ongoing education about financial management and tax obligations, empowering him to make informed decisions about his business.

Transformative Outcome:

John’s business transformed with the monthly service. No longer burdened by financial administration, he could dedicate himself to his art. His income increased as he produced more work, and he felt secure knowing his tax and financial matters were in expert hands.

Step 2: Understanding Gross Receipts Tax

Demystifying the Gross Receipts Tax for Artisans

In New Mexico, the Gross Receipts Tax (GRT) casts a wide net, much like the sprawling landscapes of the Southwest. But unlike the clear skies and open ranges, the GRT can seem like an overburdening amount of regulations and rates. Here, we’ll guide you, making GRT less of a puzzle and more of a map you can confidently navigate.

What Exactly is Gross Receipts Tax?

Think of GRT as the state’s way of participating in your success. It’s a tax on the privilege of doing business in New Mexico, and it applies to the revenue from almost all goods and services. However, as a silversmith, your dealings often involve sales to resellers—transactions that should be exempt from GRT if documented correctly.

Why Every Artist Should Pay Attention

Overlooking GRT can lead to those heart-sinking moments when a tax bill arrives, and it’s far more than expected. It’s like crafting a beautiful piece, only to realize you’ve underestimated the cost of materials—it eats into your profit. For artists, who often operate on slim margins, understanding GRT is not just important; it’s essential for the sustainability of your craft and business.

The Misconception that Could Cost You

Here’s the catch that has ensnared many: if you complete a Schedule C for your federal taxes, showing your sales, and you haven’t reported those same sales to the New Mexico Taxation and Revenue Department through NM TAP, the state will assume all of it is subject to GRT. It’s akin to displaying all your jewelry at a market without specifying which pieces are already spoken for—you might get inquiries for all, causing confusion and potentially lost sales.

The Solution is in the Detail

The key to preventing GRT surprises is meticulous record-keeping and reporting. Every time you make a sale, especially to a buyer who will resell your art, detail is your ally. Documenting these transactions properly can mean the difference between owing a sizable amount in taxes or keeping your earnings intact.

Step 3: The Value of TAP for Silversmiths

Your Financial Compass: Embracing the Benefits of TAP

Navigating the terrain of taxes without a map can lead to unnecessary hardship. That’s where New Mexico’s Taxpayer Access Point (TAP) steps in—think of it as your financial compass, guiding you through the complexities of gross receipts tax and ensuring you stay on the right path.

Simplifying Your Tax Journey

For silversmiths, TAP isn’t just a convenience; it’s a transformative tool that simplifies your tax journey. It allows you to report your income, claim deductions for wholesale sales, and pay any due taxes online. This system is designed to be user-friendly, giving you more time to focus on your craft rather than on cumbersome paperwork.

Avoiding the Quicksand of Tax Errors

By using TAP, you’re not just keeping up with your tax obligations; you’re actively avoiding the quicksand of common tax errors that can trap the unwary business owner. Just as you carefully craft each piece of jewelry, TAP helps you craft a meticulous record of your sales and taxes, ensuring that every detail is accounted for.

A Bridge to Peace of Mind

Perhaps the most significant value of TAP lies in the peace of mind it offers. With TAP, you’re less likely to face those unexpected tax bills that can so often derail a small business’s finances. Instead, you’ll have a clear overview of your tax situation, with the ability to manage it proactively throughout the year.

In the following steps, we’ll take a closer look at how to set up your TAP account, step by step, to unlock these benefits. You’ll learn how this vital tool not only keeps you compliant with New Mexico’s tax laws but also empowers you to take control of your financial destiny.

Step 4: Step-by-Step Guide to Setting Up TAP

Charting the Course: Creating Your TAP Account

The Taxpayer Access Point (TAP) is your portal to tax tranquility. To set sail on these calm waters, you must first anchor your account. Let’s chart the course with a step-by-step guide to creating your TAP account.

Step 1: Embark on Your Journey

• Start by visiting the New Mexico Taxation and Revenue Department’s TAP website.
• Look for the option that says “Create a Logon,” and click on it.

Step 2: Claim Your Name in the Digital Realm

• You’ll be prompted to enter personal information to verify your identity. This step ensures that your tax journey is secure from the start.
• Input your Social Security Number or Individual Taxpayer Identification Number, and provide your name exactly as it appears on your tax documents.

Step 3: Plotting Your Account Credentials

• Create a username that you’ll remember – it’s the name of your ship in this digital ocean.
• Choose a strong password that’s a mix of letters, numbers, and symbols – consider it the keel that keeps your ship stable in turbulent waters.

Step 4: Navigating Through Security

• Set up security questions. These are the lighthouses that will guide you back to your account if you ever get lost.
• Provide an email address where you can receive important updates and confirmations from TAP.

Step 5: Docking Your Business Information

• If you’re registering as a business, you’ll need your Employer Identification Number (EIN) and business details.
• Ensure that all the information matches your federal tax records to avoid confusion in the tax seas.

Step 6: Confirming Your Voyage

• Review all the information you’ve entered. Confirm that it’s as accurate as a master silversmith’s measurements.
• Submit your registration and check your email for a confirmation link to finalize the creation of your TAP account.

Step 7: Set Sail with Confidence

• Once your account is active, take a moment to explore the dashboard.
• Familiarize yourself with the filing options, payment methods, and account management tools.

Congratulations! You’ve now successfully navigated the process of setting up your TAP account. In our next chapter, we’ll explore how to decide between monthly and quarterly filings and the advantages each option presents.

Step 5: Monthly vs. Quarterly Filing: What’s Best for You?

Choosing Your Filing Frequency with Wisdom

Once your TAP account is ready, you’ll face a choice that’s critical to your journey: deciding how often to file your gross receipts taxes. This decision, much like choosing materials for your next piece, requires an understanding of the benefits and implications of each option.

Monthly Filing: For the Meticulous Artisan

• Monthly filings are ideal for silversmiths with a steady stream of transactions.
• It allows for a more consistent and detailed record-keeping practice.
• Frequent filings can help prevent the accumulation of a large tax burden, making each payment more manageable.

Quarterly Filing: The Seasoned Craftsperson’s Choice

• If your business has less frequent sales or operates on a project-to-project basis, quarterly filings may reduce your administrative load.
• This option gives you more time to gather records and prepare your filings, although it could lead to larger lump-sum tax payments.

Evaluating Your Business Rhythm

• Take a moment to reflect on your sales cycle. Does your income ebb and flow with the seasons, or is it as steady as the turning of the earth?
• Consider your comfort level with paperwork. Do you prefer to address it in small, regular increments, or do you thrive on less frequent, more intensive periods of administrative work?

Making the Informed Choice

• There’s no one-size-fits-all answer. Your decision may also depend on cash flow considerations and the time you have available for administrative tasks.
• Remember, you can switch your filing frequency if your business model changes, just as you might adapt your artistic techniques over time.

Seeking Guidance on Your Path

• If you’re unsure which path to choose, it may be wise to consult with a professional, like Jason Arsenault CPA, LLC, who can offer tailored advice based on your specific circumstances.

In our next segment, we’ll discuss the critical steps for dealing with past sales to wholesalers and how to ensure these transactions don’t turn into tax time terrors.

Step 6: Managing Past Sales and Avoiding Tax Pitfalls

Retroactive Steps: Reconciling Previous Wholesale Transactions

The craft of silversmithing is not just about creating new pieces; sometimes, it involves repairing and refining existing works. Similarly, managing your taxes sometimes means looking back and ensuring past sales, especially those to wholesalers, are in order.

Facing the Music: Dealing with Back Taxes

• If you’ve sold items to resellers but haven’t documented these sales correctly, the state may assume they were retail sales, taxable under GRT.
• The first step is to gather all documentation related to past wholesale transactions. This includes invoices, receipts, and any proof of sale to resellers.

Setting Things Straight with TAP

• Use your TAP account to file amended returns for the periods in question, clearly indicating sales to resellers.
• If necessary, reach out to your buyers for signed Non-Taxable Transaction Certificates (NTTCs) as proof that the sales were for resale and exempt from GRT.

Steering Clear of Future Troubles

• Going forward, ensure that each wholesale transaction is accompanied by an NTTC from the buyer.
• Record these transactions promptly in your TAP account to maintain a clear and current record of all taxable and non-taxable sales.

Creating a Safety Net

• Consider setting aside a small percentage of each sale in a separate account to cover potential tax liabilities.
• This practice can provide a financial cushion should you encounter any unexpected tax assessments in the future.

Leveraging Professional Expertise

• Navigating back taxes can be daunting. It’s often worth seeking the guidance of a tax professional who can help you through the process and potentially mitigate penalties.

In the next and final step, we’ll wrap up our journey with essential tips for maintaining your TAP account and making tax management an integral part of your thriving silversmith business.

Step 7: Ongoing Tax Management and TAP Account Maintenance

Forging Ahead: Keeping Your TAP Account Polished

Just as a silversmith regularly maintains their tools to ensure the best craftsmanship, so too must you keep your TAP account well-managed to ensure financial health. Here’s how to keep your tax management as pristine as your silverwork.

Regular Check-Ins: The Heartbeat of Your Business

• Schedule regular intervals to log into TAP, much like you would set time aside for creating your pieces. Consistency is key.
• These check-ins are your opportunity to file necessary reports, update any changes in your business, and verify that all previous filings are accurate and complete.

Document, Document, Document

• Keep a rigorous record of all sales, expenses, and purchases. Digital tools can help, but a simple spreadsheet can also suffice.
• Remember, the more detailed your records, the easier it will be to file your taxes and defend against any inquiries from the state.

Embrace Technology for Efficiency

• Consider using accounting software that can integrate with TAP, allowing for smoother data transfer and less manual entry.
• Mobile apps can also be useful for tracking expenses and sales on the go, especially useful for silversmiths who travel for shows or sourcing materials.

Stay Informed: Tax Laws Can Change

• Tax laws are as mutable as fashion trends in jewelry; they can change with the seasons. Stay updated on any changes in GRT legislation or filing procedures.
• Workshops, webinars, and newsletters from tax authorities or professional bodies can be excellent resources.

Partner with a Professional

• A CPA, especially one familiar with the nuances of your trade and locale, can be an invaluable ally. They can handle the complexities of tax law, leaving you free to focus on your craft.
• Services like Jason Arsenault CPA, LLC offer specialized knowledge that can save you time and protect you from missteps.

Looking Forward: Planning for Growth

• As your business evolves, so will your tax responsibilities. Use your TAP account to forecast tax liabilities based on your growth trajectory.
• Planning for the future ensures that taxes never become a hindrance to your success but remain a manageable part of your business strategy.

With your TAP account set up and your understanding of GRT sharpened, you’re now equipped to navigate the fiscal landscapes as skillfully as you do the creative ones. Tax management, much like silversmithing, is an art form—one that rewards patience, precision, and proactive engagement.

Conclusion: Polishing Your Tax Strategy

As our journey through the intricacies of New Mexico’s Taxpayer Access Point (TAP) comes to a close, let’s solidify the actionable steps that will ensure your path as a silversmith remains as clear and uncluttered as the southwestern skies.

Actionable Steps for Silversmiths:

1. Regular TAP Check-Ins:
   • Set a monthly or quarterly reminder to log into your TAP account.
   • Use these sessions to file reports, update your business information, and confirm past filings.
2. Impeccable Record-Keeping:
   • Maintain a dedicated system for tracking sales, purchases, and expenses. Consider digital tools for efficiency.
   • Store all relevant documents, such as Non-Taxable Transaction Certificates and invoices, in an organized manner.
3. Embrace Technology:
   • Integrate your accounting software with TAP to streamline your financial reporting.
   • Utilize mobile apps for on-the-spot expense tracking and sales recording.
4. Stay Updated on Tax Laws:
   • Subscribe to tax newsletters, attend state-provided webinars, and participate in workshops to stay informed about changes in tax legislation.
5. Consult with a Tax Professional:
   • Engage with a CPA like Jason Arsenault CPA, LLC, who understands the unique needs of silversmiths and can provide personalized tax guidance.
6. Forward Planning:
   • Use your TAP account to help forecast future tax liabilities as your business grows.
   • Include tax planning in your business strategy to ensure it supports your growth and doesn’t become an obstacle.
7. Educate Yourself:
   • Take advantage of resources provided by the New Mexico Taxation and Revenue Department to better understand your tax obligations.
   • Knowledge is power, especially when it comes to navigating the complexities of tax laws.

By following these steps, you’ll not only safeguard your business against tax-related issues but also free up more of your time to devote to your artistry. Remember, managing your taxes effectively is not a one-time task but an ongoing process that requires attention and care.

Your Next Move:

Keep Your Craft in the Spotlight – Let Us Handle the Numbers

🌟 Special Offer for Artists: Unveil the true potential of your art without the burden of tax and financial management. Our monthly services are specifically tailored for artists like you. We’ll manage your Gross Receipts obligations, track every expense, and every stream of revenue, ensuring your focus remains on your craft.

💼 What We Offer:

• Comprehensive GRT Handling: Never miss a beat with your Gross Receipts Tax. We keep track of it so you can keep crafting.
• Expense & Revenue Tracking: Real-time monitoring of your finances. Know where you stand at any moment.
• Yearly Tax Return Preparation: When the tax season comes, you’re ready. No fuss, no rush, just a smooth sail.

✨ Your Art, Your Passion, Our Commitment:

• More Time for Creativity: With us, you gain hours to invest in your art, not spreadsheets.
• Peace of Mind: No more tax-time terrors. Sleep easy knowing the details are dialed in.
• Financial Clarity: Understand your financial landscape with clear, concise reports.

🚀 Take the Next Step: Don’t let tax worries dictate your artistry. Click here to set up an appointment. Start your journey towards financial freedom and undivided creative dedication today!