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E-Commerce Sales? Collect State Sales Tax
How and why you should get a state sales tax number. We cover the who, what, when, where, and why….
Why get a state sales tax number for your e-commerce business?
In this episode of Entrepreneur Girl’s Tracy’s Tuesday Tips, we learn why to get a state sales tax number for Amazon FBA and Ebay.
Coming to us from Indiana, Tracy tries to make tax learning interesting by creating a power-point to help explain what it is and just why we have to pay it in the first place and how we can make sure we are doing what we are supposed to be doing.
In the “What” section, we learn that it is a direct tax on consumption of goods and services. There are five states, as of 2014 (Alaska, Deleware, Montana, New Hampshire and Oregon) that do not have sales tax.
The amount of the tax we have to pay is typically based on a percentage of the sales price. Since taxes are imposed at the point of sale, merchants are responsible for collecting the tax and submitting it to the state.
This requires many businesses to register with the state agency for a permit. This then, imposes an obligation on all merchants to maintain records of all of the sales and to make periodic payments to the government.
Collection of sales taxes for online purchases has been a controversial topic.
Who has to collect sales tax?
Next is the “Who” section: Who has to worry about this tax? That would be everyone! It’s the law!
The “When” section tells us that if we are just hobby garage sale people, then it isn’t as important, but if you are more than that, you should worry about it because it is the law in 45 states and you will want to protect yourself.
Why collect sales tax on your items sold on eBay and Amazon?
In the “Why” section Tracy explains that when we sell on Amazon or Ebay and ship merchandise to the same state, then we have to collect and pay the sales tax to that state.
You can purchase items without paying sales tax on them if they are not for personal use and are intended for resell.
Also, most wholesale companies, banks, trade shows and merchant marts will require you to have a sales tax ID number before they will even work with you.
In the “Where” section, we learn where we have to go to get this tax ID number. You will have to go to www.XX.gov (enter your state abbreviation where the XX is located) Then search on that page for the sales tax number or resale certificate number. It should be easy to do and inexpensive.
What service handles sales tax for your e-commerce business? Consider TaxJar.com
If you don’t want to deal with this, you can call your CPA and ask them to set it up for you. Also, you can utilize a service, such as, www.Taxjar.com to have them handle this record keeping for you. Tracy doesn’t use the service but she wanted to put it out there as an option for you.
Ask your CPA for help with state sales tax
Tracy reminds us that she is not a CPA and so because of that, it is best that you talk to your CPA for your tax advice.
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