As an ecommerce business owner, navigating the world of sales tax can feel overwhelming. With varying rules and regulations across different US states, it’s crucial to understand your obligations and stay compliant.
1. Nexus: Establishing Your Presence:
Nexus refers to the legal connection your business has with a state. This is important because it determines whether you’re required to collect and remit sales tax in that specific state.
The 2018 Supreme Court Wayfair decision significantly impacted nexus rules. Now, having a physical presence isn’t the only factor. Economic nexus, such as exceeding sales thresholds (varies by state), can also create nexus.
2. Sales Tax Permits:
Once you have nexus in a state, you must register for a sales tax permit. This allows you to collect and remit sales tax legally.
The process involves registering with the state’s department of revenue and obtaining a unique permit number.
3. Calculating and Collecting Sales Tax:
The sales tax rate applied is specific to the customer’s shipping address, not your business location.
Most states offer online sales tax calculators to help you determine the correct rate.
Integrate your platform with a sales tax automation solution to streamline the process.
4. Filing and Remitting Sales Tax:
File sales tax returns periodically, typically monthly, quarterly, or annually, depending on the state.
Remit the collected sales tax to the respective state authorities along with your return.
5. Staying Informed:
Sales tax rules and regulations are constantly evolving. Stay updated on changes in the states you have nexus in.
Utilize reliable resources like the Streamlined Sales Tax (SST) website for guidance.
Remember:
Non-compliance can result in penalties and fines.
Consider seeking professional guidance from a tax advisor for complex situations.
By understanding these key points, you can ensure your ecommerce business remains compliant with US sales tax regulations. Remember, staying informed and seeking help when needed can save you time, money, and stress in the long run.