Sales tax may feel like an overwhelming part of your business. Understanding and managing it is a crucial part of keeping your operations smooth and compliant. Let’s break it down, so you can focus on what you do best, making those sales and growing your business!
What is Sales Tax Nexus?
Sales tax nexus is the connection that makes you a tax collector in a state. It can happen in two ways:
Marketplace Facilitator Laws
To supposedly “simplify” compliance, many states have introduced marketplace facilitator laws. These laws require platforms such as GearSource, Amazon, eBay, and Etsy to collect and remit sales tax on behalf of their sellers. Needless to say, if you’re selling with GearSource, consider us your reliable tax partner! We’ll take care of calculating, collecting, and remitting taxes to the appropriate authorities, so you don’t have to worry about it. However, if you also sell directly through your website or social platforms like Facebook Marketplace, you will need to manage taxes for those sales yourself. Knowing the rules ensures you don’t overlook any obligations and subject your business to extremely costly penalties and disruptive audits.
Different States, Different Rules
Each state has implemented micro-rules, within the overall code and of course, this adds additional confusion and complication. Some of these state based differences include:
Stay Compliant
Sales tax compliance is about more than just collecting and remitting taxes. You are required to keep detailed records, file returns on time, and stay current with the ever changing landscape of tax regulations. Mess it up, and you could face significant fines. Keep it straight, and your business will stay in good standing!
Get Help
Sales tax can be more complicated than it looks, but you don’t have to go it alone:
Stay Compliant!
Understanding domestic sales tax rules is essential for any online seller. By knowing your nexus status, understanding state specific rules, and staying on top of deadlines, you can avoid costly mistakes. Whether you use software or consult with a professional, make sure you’re prepared to handle sales tax confidently.
Author - Amanda Hart - Finance Coordinator