More and more companies are using Cloud services (in essence, renting space on a remote server) instead of purchasing and maintaining their own servers and other technology equipment.
Operating in the Cloud can be more secure, depending on the vendor you choose, and it can save a significant amount of money. But, as AccountingWeb points out, some wording in vendor agreements may create a principal-agent or lessee-lessor relationship between your business and the Cloud vendor. With either of these relationships, because of the activity of the vendor, you may be required to register as a sales tax vendor and collect sales tax in states you wouldn’t have otherwise.
Before you enter into an arrangement with a Cloud vendor, it’s a good idea to have a tax professional look over the agreement to determine if the wording would make you liable to register and collect sales tax in states you’re not actually operating in.
I’d be happy to talk with you if you have any questions about sales tax and Cloud services. Just give me a call at (864) 836-3136, and we’ll set up an appointment.