💰Sales Taxes

So...the federal government got their piece of the pie, but now the state wants some of the action. We'll help you understand how to manage another scary topic.

Taxes are simply a part of life. This guide will discuss how you can manage your state and local sales taxes and get exemptions on items you purchase.

Heads up! This guide is intended for U.S. based sellers.

Your tax liability

• You may have heard of the Wayfair Case. This refers to a U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. that states can require out-of-state sellers to collect and remit sales tax on sales to in-state consumers even if the seller has no physical presence in the consumer's state.

  • WHAT THIS MEANS FOR YOU: States may create rules which require out-of-state sellers to collect and remit sales taxes if you have reached certain thresholds.

• When it comes to in-state sales in states where you have a “nexus” — or a physical presence in that state — you have always been required to remit these taxes to your state authorities, even before the Wayfair ruling.

• Here’s the good thing about these laws for us as small businesses: Most states have established something called marketplace facilitator laws, which require online marketplaces such as Amazon, eBay, Etsy, etc. to both collect and remit sales taxes on behalf of marketplace sellers. This helps states collect more tax revenue and takes the headaches off of you as a small seller. This means you theoretically should NOT have to remit sales taxes on your marketplace-driven sales.

• Now, let’s say you’re selling locally. Legally, you are required to collect and remit taxes on these sales if you don’t go through a marketplace facilitator who helps to collect these taxes.

Getting a tax permit

• If you are a serious online seller or even just starting out, you should really consider signing up for a Sales Tax Permit with your state tax authority. Not only is it the legal and ethical thing to do, but it will also qualify you for exemption from paying sales taxes when you buy inventory for your business.

  • We cannot stress this enough — this is a benefit which can transform your business from a hobby to a real, profitable business.

• Each state has different rules when it comes to registering for a sales tax permit. If you have particular questions about your state, feel free to reach out to a member of the CommerceNavigator staff and we will be happy to help guide you through the process.

• Try a simple Google search of “Signing Up for a [insert state here] Sales Tax Permit.” This should help you find what you’re looking for.

Our lawyers want you to know: while we're pretty proud of our team here at CommerceNavigator, we aren't acting in an official capacity as your CPA or attorney. We provide general information for educational purposes, not specific or professional advice. Since every situation is unique, you may want to consult with the appropriate experts for accounting, legal, and business issues.