Let’s talk about processes. As a savvy eCommerce business owner, chances are you are busy putting your processes in place so you can deal with any surprises that the busy holiday season plans to throw at you.
One hassle you can easily take care of is sales tax. Just double check these 5 things before Q4 kicks into gear and you should have no sales tax hassles this holiday season.
- Ensure you are collecting sales tax in all your nexus states
“Sales tax nexus” is a fancy way of saying a significant presence in a U.S. state. Locations, employees and inventory in a state are just a few of the business factors that can create nexus for your business.
If you have nexus in a state, you should register for a sales tax permit in that state and then collect sales tax from your buyers in that state. You should also…
- Ensure that you are collecting sales tax on all your eCommerce platforms
Many online sellers take advantage of selling on a new platform, such as Shopify or the Walmart Marketplace, during the holiday season. The Q4 bump is a great way to kick off selling on a new platform.
However, it’s easy to fall into a sales tax trap if you forget to collect sales tax in all your nexus states on your new platform.
For example, let’s say you have sales tax nexus in 5 states because you sell on Amazon FBA and store inventory in warehouses in different states. Then you start selling on eBay. Make sure when you set up your eBay sales tax settings that you collect sales tax in all 5 of your nexus states via eBay.
- Ensure that you are collecting sales tax correctly on shipping & gift wrapping
Many sellers don’t realize that most U.S. states consider shipping charges to be taxable. For instance, say you sell your buyer a $50 item and charge $5 to ship the item to your buyer’s home. In most states, the entire $55 charge that you charged your customer is taxable. Amazon allows you to set whether you want to collect sales tax on shipping charges in each state.
You can see guidelines to setting up Amazon sales tax on both shipping and gift wrapping here. Or you can watch this handy video:
- Did you take advantage of the recent sales tax amnesty? Make sure you collect sales tax at the right time
U.S. sellers (or non-U.S. sellers with sales tax nexus in the U.S.) recently had the opportunity to take advantage of a sales tax amnesty. Sellers who took advantage of the chance to eliminate past due sales tax liability will be required to collect sales tax starting December 1st. If you took advantage of the amnesty, don’t forget to start collecting sales tax on your online shopping carts and marketplaces by December 1st.
Important to note: If you are unsure whether your amnesty application has gone through, wait for communication from the Multistate Tax Commission. Don’t assume that you are registered to collect sales tax!
- Put your sales tax life on autopilot
You are going to have limited time during Q4. You’ll likely experience a huge sales bump, not to mention you’ll want to spend quality time with your family at the holidays! That’s why you should consider putting some tasks – like sales tax – on autopilot.
Instead of worrying about gathering up sales tax data or missing a filing deadline, automate your sales tax and focus on the things that matter – like fulfilling Q4 orders or finding the perfect toy to put in your child’s stocking! If you have better things to do than file sales tax returns, try a 30-day free trial of TaxJar.
I hope this post has helped you put a lid on sales tax for Q4. If you have any questions, start the conversation in the comments!
TaxJar is a service that makes sales tax reporting and filing simple for more than 9,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!