Yes that's right. The reason why it's so complicated is because the political prostitutes try to make it look like they're doing something. Not only that, they always want your money.
Flat 7.475% tax. Collect on everything pay to one government office who gives it to the states items were sold to who in turn devieds it to localities. In my city, we have about 15 tax locations or districts its split into 3 counties you do the math but how many locations are in each state, how many cities whats the local tax liability, how many states? You might think a computer program, but one vote can make it outdated. Its too much shit to deal with for a small business and difficult at best for a large company like Amazon. Flat tax. Register with just them And let retailers do what they do best Makes sales and ship products.
@@bobbg9041 I’m in California and last time I checked we have over 200 individual county tax rates. Then there are individual city/town tax rates. As a new business just starting out I honestly have no idea where to start I can’t seem to find an easy to understand way to deal with all of this!
Thanks for watching! Please ask questions below, and our sales tax experts will respond. For information on our sales tax course, click here - ledgergurusuniversity.com
Hello if I have an online registered business out of Dallas Texas , how do I go about sales tax? I sell to every state. Do I collect sales tax from each state? Or should I just enable sales tax on my website? Also, since I’m living and doing business in Texas, should I collect tax sales tax from my Texas customers?
Hi, you should start by registering for a sales tax permit in Texas and collecting and remitting sales tax for Texas customers. If you have any employees, locations, or inventory held in any other states, you will want to do the same in those states. The next step we would recommend is watching your sales volume. If you are approaching 200 transactions and/or $100K in any state, you will want to check their economic nexus thresholds. Don't enable sales tax on your website before registering for sales tax permits. Collecting sales tax in any states where you don't have a sales tax permit is the worst thing you can do! For more help download our Sales Tax Guide here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If states have marketplace facilitator laws and I am selling on amazon to those states, I don’t need to register for sales tax? Since, Amazon, or the facilitator, is remitting the states on behalf of me (the sellers)? Or do I still need to register if I am selling below the threshold?
Some states require sellers to register and file a zero-dollar liability return, even though amazon is collecting and remitting on behalf of its sellers. Once again, it differs by state, making it a huge pain to navigate. If you'd additional help, you can reach out to us here: ledgergurus.com/services/sales-tax/
If I don't have nexus in a state, based on revenue thresholds and transactions, would I not collect sales tax in that state at all? Or not matter what, should we register with each state?
Liked & Subscribed - Got turned on to you by our bookkeeper. We're swimming in nexus questions- why is this so hard!!!?!?!? Ok, I"m reading the PDF and will click on all the links and watch as many vids as possible. Then I'll reach out to you for help! Thank you for creating and sharing this content - super helpful and very supportive.
Take ownership and learn that shit. No good in complaining about what school never taught us. Forget that rainbow fish and start learning what matters lol
So if my extremely small business isn't hitting any of the "items sold" or "income" thresholds for the states, I only have to collect for the state I have nexus (live) in?
Yes, that is correct. Also keep in mind other ways you'd have "physical nexus". For example, if your inventory is stored in any other states, you have employees in other states, etc. This is usually unlikely for small sellers unless they use Amazon FBA.
This whole system needs to be overhaul, it's like you need a degree in taxes to be able to keep your business functioning. Great video, very informative.
Thanks for this video. I’m about to start my very small online business. And I plan to sell worldwide because basically any one from around the world can click and buy. From the explanations you gave, 1. If someone buys my product from any of the US states I do not have to charge them for tax neither do I have to pay tax right as long as I have not hit the threshold ? 2. I will be operating from one of the Canadian provinces, let’s say Ontario for example, I only need to charge buyers for taxes in Ontario and not other provinces ? 3. Before one can charge a tax, you must have a legal permit to do so right ? so basically it’s not like you can just input 5 % for example of total price of good the customer bought because you know for example the province you operate from charge 5% tax 4. Does one need to register the business even though very small first before selling at all? Sorry for the many questions
Hi Mary, here are our responses: 1. That is correct. You most likely will only need to register and collect in states where you have a physical presence (inventory stored, where you are located, employees hired, etc) or where you have economic nexus (the annual sales or transactions thresholds) 2. This video only applies to US sales tax. We don't handle sales tax outside the US. 3. Yes, you need a legal permit. Any sales tax collected is the state's money. You are liable to remit that to the state, and therefore legally cannot collect unless you have a permit to do so. 4. Here's an article on the benefits of registering your business; www.oberlo.com/blog/how-to-register-a-business
Hi! I am an Australian author and here are my questions: 1. What if I am selling digital content through my website like ebooks or monthly membership to read those ebooks? 2. What is I sell physical books (signed paperback) and ship them to my customers wherever they are?
Digital content and physical books are taxed differently. If you don’t pass the economic nexus threshold in the states in the US, I wouldn’t worry about collecting tax.
First of all, very informative videos on the sales tax topic - best ones I can find on RU-vid so far, well done and thanks! Now my questions: we are a small Canadian business that sells to the States through two channels: Amazon FBA, and Amazon MCF (Multi-chanel fulfillment) via our own website. Sales volumes are way below the $100,000 / 200 threshold for every state (so no economic nexus?). BUT since we are using FBA and MCF we do use Amazon’s warehouses, which means we still need to register and collect sales tax that we made on our website (MCF) in those states? Even though we just have, say, $5,000/year revenue in that state? Thank you and keep on the great work!
Great question. FBA can get a bit tricky. I suggest you download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. It will give you some great info on this topic. In the 1st section - Determine Sales Tax Nexus - it says, "All states, except, IL, NY, and AZ consider your stock held in an Amazon warehouse enough of a presence to create nexus in their state." So yes, because nexus has been created through FBA, you do have to register and collect on your website.
If I have an online business in California from home and will be shipping from California to other states. Do I have to charge taxes for the states I ship to?
Hi Herman. If you do not have nexus in these other states, you don't need to collect sales tax. Just make sure to watch economic nexus thresholds. When you reach a certain number of sales in states you ship to, then you'll need to start collecting in those states: ledgergurus.com/blog/ecommerce-sales-tax-and-economic-nexus/
this video and the comments anwsered a lot of my questions! I wasnt sure if i had to collect sales tax from each state and county but it seems like its only the place you are physically present in. If im correct , thank you for the info!
So I wanna open an online boutique in Oregon, and theres no sales tax here, I would be shipping from my home. Do I just track my sales and if they ever get over 200 transactions or 1OO,OOO in a certain state I start to charge sales tax and have to register in that state? Or do you charge sales tax since day one. Thanks in advanced! Im very confused.
This is correct. Be aware that states do have differing thresholds of transactions and/or sales. But generally when you are approaching 200 transactions or $100K in a state, you'll want to check their economic nexus laws. When you do have sales tax obligations in a state, just make sure you register for a sales tax permit before collecting sales tax from customers. For more help, you can download our sales tax guide here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
What a great video for such a complex topic! My only question is: once you reach an economic nexus in another state (by $ or #of orders) you only have to start collecting/remitting tax for all orders after? As in nothing retroactively. You then wouldn’t have to pay any back tax on the orders before the specific threshold? Thanks so much in advance.
You are correct. You only pay taxes on the amount after you reach the threshold. If you'd like more information on sales tax, check out our free masterclass "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." It's packed with valuable information AND gives you a roadmap to follow to do it correctly. It also tells you the 3 things NOT to do when you're setting up your sales tax. ledgergurus.com/resources/sales-tax-masterclass/
Thank you so much. Very informative video. 1- If the company that manufactures my product (which I'll be selling online) resides in a different state, does that mean I have nexus in that state? 2- Also, if the threshold is reached in one year, then I have to register with the state and start adding sales tax even if my revenues in the next year maybe less than the threshold I met on the previous year? For example, I made $150,000 in Arizona in 2020 in online sales, then I need to register and start charging Arizona's customers the sales tax in 2021 even if the total of my revenues from Arizona in 2021 is say $20,000. Is that correct? So, I have to charge sales tax after the threshold of a specific state is met in one specific year regardless if that threshold is kept in the subsequent years.
Hi Sarah, Here are the answers: 1. Location of manufacturer usually does not create nexus. 2. Yes, this is accurate. You can reevaluate at the end of next year and de-register the year following.
Hi, thank you for this helpful video! If I am starting a ecommerce business and shipping products from my own home in Massachussets, do I need to register and collect taxes from Mass? Do I have to keep track of my sales volume by state when I get bigger to determine my nexus one by one?
Yes, you'll need to register, collect, and remit sales tax for Massachusetts sales. Then you will want to track sales volume by state as you grow to determine your economic nexus. There still may be other ways you have nexus in states, but economic nexus is one of the most common.
Hi, If I live in the EU and don't have any inventory or employees in the US do I have to collect US sales tax? How does it work for EU residents? Could you make a video for EU sellers that sell into the US?
You most likely only need to worry about sales tax in states where you have a lot of economic activity. Once you reach $100K in annual sales or 200 annual transactions in a state, then you'll want to check that state's economic nexus laws. If you are over their threshold, then you are liable for sales tax. You'll want to register for a sales tax permit in that state, collect sales tax from customers in that state, and file/remit that sales tax to the state. Good luck!
Thanks for the video I'm just starting a online art supplies store and wow, so much to learn about taxes...maybe it will be a grand opening and then a grand closing...😩
Hi! Awesome video! Our business is registered in Maryland and we have a MD sales tax ID. But we also plan to package and ship orders from NY. Do we need to register for a sales tax ID in NY as well? We’re just starting and the business is very small so we’re just a bit confused. Thanks for your help!
I believe you do since that would also count as a physical nexus. I would talk to your accountant to make sure you're doing everything correctly from the start. I'm in the same boat as I'm starting up an online shop and will be drop shipping a few items from another state. Good luck!
This is such a great video! You are very helpful. Can you answer this question for me please? I am an product Ecommerce business in a destination state as my only nexus and I sell nationwide. Do I only do destination tax collection and remitting for my current state or all states that have destination tax designation?
You only need to register collect and remit sales tax in the states where you have nexus. In your case it’ll be your home state and other states if you pass their economic nexus threshold. Destination means the rate you are collecting should be determined by the ship to address instead of ship from address, it doesn’t have much to do with nexus :)
Is there a sales you have to collet if your customer is not living in the US? For example you sell a t shirt to someone in france, and if so would you pay it to your home state or the federal government?
There is not any sales tax that you would owe to your home state or the federal government for international sales. Keep in mind other countries may have sales tax law laws that you would need to follow. But we do not specialize in this area of international sales tax.
Thank you for the very informative video! I have one question: say I have physical nexuses in both Michigan and Maryland and no other economic nexuses, do I only have to collect sales tax towards Michigan and Maryland customers, using the sales tax rates in those respective states?
Would you pay sales tax to your state for an online order if both your inventory and your customer are out of the state you nexus in? Or would you pay your state tax if the customer is located in your state ?
Hi Joseph, you only collect and remit sales tax for customers who reside in the states where you have nexus. So step 1 is to figure out in what states you have nexus. Step 2 is to register, collect, and remit for only sales from customers that reside in the states you have nexus.
Thank you so much for your helpful and informative videos! I'm just starting an online, e-commerce business and do not have a warehouse or physical presence. I'm re-selling retail products. I live in CA, and will only be selling to CA residents. Do I need to have a seller's permit, and do I need to collect sales tax? If I need to collect sales tax, should I set my sales tax rate to CA's tax rate? Your advice is greatly appreciated.
Yes, because your business is based in CA, you need to register and collect sales tax in CA. If you want more information, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. It's full of useful tips. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
This is so informative information. I filled out a form on your website to get more sales tax guidance for my Shopify website . I look forward to your reply. Thank you
@@OnlineIncomeSisStarHave you looked into our sales tax courses? They are specifically geared towards sellers like you. ledgergurus.thinkific.com/collections/sales-tax
Since you don't have nexus with other states, you don't have any sales tax collection or filing obligation with other states. I would keep monitoring your sales revenue and volume into other states to make sure they fall under the economic nexus threshold.
This might sound like a stupid question but if I’m in California and I’m shipping to for example a customer in Florida and I have no Nexus with Florida do I charge the California tax still? Or do I charge California tax and Florida tax?
You only charge sales tax to customers for the state they live in. And you don't need to charge sales tax until you have nexus in a state. We just did a webinar going through the entire process of sales tax. I think you'll find it valuable. Here's the link to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
Thank you so much for this amazing video. I started an online business 5 months ago. I do everything from home in Michigan. I’m getting closer to reaching 200 sales. My question is do I charge taxes only to the people who order from Michigan where I am based? Or do I have to register in all states?
At the beginning you only register & charge sales tax in the states you have a physical presence in. That sounds like it's Michigan right now. You need to watch your sales in other states to see when you're getting close to economic nexus. We just did a webinar on all this that will answer so many of your questions. Click here to watch it don-demand - ledgergurus.com/resources/sales-tax-course-updates/.
Hi there, Thanks for this informative and very detailed video; truly grateful for that! As of today, I don't understand how sales tax collection works at all. I was wondering if you could help clarify the following questions: 1. If I have not yet set up a US entity (LLC, S-corp, etc), how, if at all, should I collect tax? 2. I am in the process of registering for an LLC, and I was thinking about Wyoming. If I end up doing so, does that mean that I would just need to collect sales tax in Wyoming? Also, what if I would be managing this new business (LLC) remotely? Does it have any effects? 3. Aside from Taxjar (if recommended), is there any other automated software that simply does the tax collection for us? Thank you so much in advance!
Thanks for reaching out. These are some great questions. The first place to start with all this would be our free masterclass called "The Uncomplicated Truth about Sales Tax." You can find it here: ledgergurus.com/resources/sales-tax-masterclass/ Next, your questions: 1. You need an FEIN to register or an ITIN (if you are a foreign seller). 2. Yes, that will create physical presence in Wyoming, even if you manage it remotely. 3. Avalara and Sovos will do tax calculation and remittance as well.
Thanks for such a great video. I’d like to ask you couple of questions: 1. if I am on a physical location in New York, selling cleaning products to resellers and final consumers, Do I charge taxes to both type of customers ? 2. Having an online store, based in New York and selling toys, means that I have to charge taxes to all 50!states ? I would appreciate your comment. Thank you
1. Only to final consumers; 2. If you have economic nexus in other states then you should register and collect remit tax. But if your online sales into other states don’t pass the threshold then you don’t need to worry about charging taxes.
@@LedgerGurus I do appreciate your quick response!! Thank you so much. You know where I can find more info about the threshold ? I would like to know my limit threshold in NYC selling to all states in Usa, pleaseeee !!!!
Is the trash hold what I sale per state or our business entire sales? Ex: If I exceed 100 000 in my business, and I did 50 000 in Florida (my original state being TN), I have to pay in FL? Or I need to exceed 100 000 in FL sales? Thank you for your help. Your videos are very helpful 😉
Hey I have an online e-commerce store... I'm based here in Texas.. My question is, do I charge taxes for customers living in other states besides Texas?
You won't be liable for sales tax in other states, unless you have nexus in those states. The most common ways you would have nexus is if your inventory is held in other states, you have employees in other states, or you have economic nexus in other states. Economic nexus occurs if you have a large volume of transactions and/or revenue in another state. Each state has differing thresholds, but if you are approaching 200 transactions or $100,000 in sales in any state, you should check their economic nexus laws. Once you have nexus, you are liable to register, collect, and remit sales tax in a state. If you don't, a State can come after you for the sales tax owed and associated penalties.
Hello, great information shared! We plan to operate from EU with a a company settled here and sell in the US. If we consider we are going to be a B2C we do not have to charge VAT, but we have to collect sales tax from each state's citizen differently or collect sales tax with the nexus with our print provider?
The location of your print provider should not create nexus. Since your business is registered and based outside the US, you likely won't have nexus in any states until you start to hit economic sales tax thresholds. If you are approaching $100K of annual sales in a state and/or 200 transactions, then you should look into their economic nexus laws. Also, if you have any employees or inventory held in the US, you would have nexus in the states where you have employees or inventory held. And therefore would need to register, collect, and remit sales tax for sales in those states.
You'll need to start by registering and collecting sales tax for sales in the state where you and your business resides. Remember to register for a sales tax permit before collecting. Then most likely you won't need to worry about sales tax in other states until you reach their economic nexus thresholds as described in the video.
new sub: very informative. Why do wholesalers ask for a sales tax id before talking to us. I am int in starting an ecommerce and just heard shopify does not collect taxes like other marketplace facilitators. Is this still true or has Shopify changed?
Good question. Shopify is not a marketplace facilitator, so they are not required to collect and remit sales tax for you. You have to go in a set that up yourself in the settings. But don't just go in and set it up for every state yet. You want to wait until you have nexus in a state before you register because otherwise it gets very messy. a list of those thresholds, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ In regard to your first question, wholesalers are not required to pay sales tax for wholesale transactions, so they need to make sure you are a business planning to resell their product so the sales tax responsibility falls on you.
@@LedgerGurus yes but they are requiring beforehand even just to inquire. So I ended up getting one just to obtain basic info. If I don’t decide to start. I’ll have to close my sales tax acct.
Hi LedgerGurus - Thank you for this amazing video! And thank you for taking the time to answer our questions! I have a very simple question: I'd like to start an ecommerce website in Illinois. I will work from home (no real office). I'm NOT planning to be an LLC, Corp, etc. Just a person selling their stuff. I will have just a few items to sell to start with (no "warehouse" in the house). My customers will hopefully be from all over the US. Now, do I have to register in Illinois and get my tax ID right away? Even BEFORE I sell a single item because I live here and even though I don't have an office? Or do I register AFTER I meet the Illinois economic thresholds? Also, by "registering and getting tax ID", does that mean I (a person) will become a business (an LLC, a corp, partnership, etc)? THANK YOU SO MUCH AGAIN!
Yes, you do need to register for a sales tax permit in IL because you have a physical presence there. Your business is based in your home, but it is still physically in IL. The IL economic threshold is only for those who do not meet the physical nexus rule. And no, you'll still just be a sole proprietorship after registering. By the way, you really need to watch our recent video on IL sales tax laws changes - ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-eROXxrTZPps.html. You can also read our blog about it here - ledgergurus.com/illinois-sales-tax-explained/. These changes WILL affect the way you remit sales tax going forward, no matter what size your business is.
We sell what we make as a hobby on Shopify - we have not hit 200 transactions or 100K in any particular state - do we still collect tax? Our physical location is Georgia. We are not even hitting the threshold for sales in our nexus.
Yes, you do need to register and start collecting in GA since you're based there. Just watch the others to see when you get close to crossing the thresholds. You may also want to strategize on if it makes sense to collect and remit. You may find that if your sales are too low, it might be easier & cheaper to deal with the fees and fines than to go through the remittance process all the time.
I m selling through my website and App. The purchaser may be in out side state also. How do i decide where to collect sales tax? The purchaser's state or from my home state where i run my business?
Hi Rahul. You will only need to start by collecting and remitting sales tax from any customers in your home state. Make sure you get a sales tax permit from your state before collecting. As your business grows, you may become liable to register, collect, and remit in other states. For example, if you have employees or your inventory is held in other states, you'd be liable for sales tax for customers in those states. Or if the number of transactions or total sales in another state hits certain thresholds. You can download our sales tax guide for more details: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello! Thank you for your videos. Extremely helpful. I have another question: My “side hustle” business is registered in TN where I have ALL the inventory and where I ship it from. But, I am a resident of FL by choice. I spend time in both places and I have another job in FL. Although I go there often and a lots of my sells are to that state, I don’t keep any inventory there and I ship everything from TN. I don’t sell anything in person in FL, I just guide them to shop on my website. Do I HAVE to consider FL a nexus?
I would say yes because you are physically located in FL, especially if you file income tax in FL, they would already have your information and know about your side hustle.
Hi Jenny, you are liable to collect and remit sales tax for Arizona sales in your situation. Outside if Arizona you should not have to worry about sales tax until you get a significant volume of sales in other states.
I live in Missouri and sell products to customers in person, I collect sales tax for MO. I am getting ready to start selling online as well, I don’t expect to exceed any nexus thresholds for other states anytime soon. My question is, if I don’t have to collect sales tax from customers in other states, do I just not charge any tax at all? Thank you!
Initially you register in the state your business is set up in. After that, you only register in states AFTER you have nexus there - physical or economic. We just did a webinar this week that explains the whole process. I think it'll answer any questions you have right now. Click here to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
Excellent video, thank you. I have incorporated an LLC in the state of Delaware due to no sales tax. I am a non-US resident and I am applying for an EIN without an SSN. I have a virtual office only and I intend to sell products on Amazon as using FBA. As I have no direct control over when a product might sell or where the buyer might be located will I still need to collect and pay sales tax? Thank you for your time.
We can give you more individualized help through a consulting call. You can schedule one here: ledgergurus.com/ecommerce-accounting-services/sales-tax/
Thank you for the useful information. I have a quick question: I am a small ecommerce business (Shopify) registered in the State of Florida. I sell internationally using print-on demand, do I have to set up taxes in each country that I sell to or do I only collect taxes from my registered State?
We do not deal with international sales tax. Countries have differing laws that you should be aware of in any country that you sell. For the US, you are liable for sales tax in any states where you have nexus (physical or economic, as mentioned in the video). For those states, make sure you register for a sales tax permit before collecting from customers in those states.
I actually have exactly the same question... by saying we do not deal with international sales tax, does it mean we do not need to collect sales tax on international sale? Or we need to but details based on which country you are making sales to? Thanks
Thank you so much for the very informative video! I do have one question: I have physical nexuses in Maryland and no other economic nexuses, I understand I have to collect sales tax towards Maryland customers. In my Shopify store do I check "All prices include Tax", "Include or exclude tax based on your customer's country", or "Charge tax on shipping rates" or do I check all three?
I have an LLC in CA ( where I live), and I created a DBA for my ecommerce business that I have setup with Shopify and Printful. I know my nexus is CA because I'm just starting out and I'm not storing any products at Printful's warehouses. My questions are; 1) can I use the EIN of my LLC as the sales tax ID ( I do have a sellers permit), or do I need to obtain a separate tax ID. 2) In shopify, should I set the location as my LLC business address (since it's registered with the state )or that of one of Printfuls warehouses? I appreciate your time and response.
Hi Tianna, here are our answers: 1) You need to obtain a separate sales tax ID from CDTFA 2) We suggest using your LLC's business address since no inventory is stored at Printful's warehouses yet.
If I am based in Australia and using print on demand services to sell worldwide,what must i do? I have not sold anything yet, launching ads once i know the answer to this. The POD suppliers have warehouses in over 90 countries and predicting where a product will be shipped from, depends on where the customer is located, and what the closest facility is. Much appreciate your time
I can't comment on other countries because we only do US-based sales tax, but I can tell you that a good place to start for US sales tax is to download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It'll give you a good basis in what to expect here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello! First off thank you so much for posting this video and openly sharing your expertise. My husband started a small veteran owned business last year and they sell apparel items online from a home in Colorado. They made under $10k in 2020 and no sales tax was collected from their customers until December 2020 when they began using squarespace to host their website (3 sales total). Now we are in 2021 and have made a few sales and I am doing my best to backtrack and pay sales tax to the states that we owe to. I realized after setting up some sales tax accounts in NY, TX, etc that we do not meet any of the remote seller's thresholds which requires that we file and pay. So in this case who do I pay the sales tax to? I was under the impression that for an online business based out of CO that we owe sales tax to the state we ship to, but if those thresholds are not met are we required to pay to CO?
You will need to collect and remit for sales based in CO because of your physical presence but you won't owe any to anyone else until you pass those thresholds. Your best path is to refund the sales tax to your customers.
What about use tax? Everybody is talking about sales tax but not use tax. I've read but not sure if it is true that you have to charge use tax if you haven't established a nexus in that state. This is so confusing and frustrating to have your own website and now know how to set this up.
No you don’t need to. Use tax is incurred when you purchase something for use that you didn’t pay sales tax for. But for remote sellers, lot of time states require them to register for vendors use tax and require in state sellers to register for sales tax.
What about selling courses online on a website? It's an intangible asset because there is no physical course; the students would do it on the same website. Do those types of companies have to pay sales taxes? What about who sells courses is not an entity (LLC) but a sole proprietor? Thanks
Depends on the state. Generally, online courses that are pre-recorded are usually taxed, but if there’s any live interaction with the instructor, it becomes a service and is not taxable.
Hi, I'm under 18 and have a Shopify account that I pay the monthly subscription on, and I have a few questions I hope you can answer. (Disclaimer: I'm from the US) 1. If I change the Shopify account to my parent's name, will they have to pay the Shopify account's taxes? 2. When registering for Stripe for Shopify, should I use all of my parent's information? 3. When creating a PayPal account, can I put it under my parent's name and use my high school checking account debit card? 4. Is there any way I could have money sent to my account without Shopify shutting down my store?
Can you give an example of a marketplace nexus? I am trying to figure out if I use PayPal as a payment processor, of that means that I have a marketplace nexus in California. But the wording I was reading is very unclear and an example would be useful. Thanks!!
Hi! Marketplace nexus applies to marketplace facilitators and sellers. PayPal is a payment processor, not a marketplace facilitator. For example, if you sell on Amazon (marketplace) you have nexus in CA and all the states that have sales tax except MO because Amazon has nexus in all those states. So Amazon's nexus extends to you as a seller.
Thank you so much for this video! I just started a small business based in California, but we've already had a few sales in other states (only a handful). I know you mentioned keeping an eye on our sales to know when we hit the nexus threshold. Just to confirm, are we not required to pay taxes to a state based on its nexus laws until we hit that threshold? Want to make sure I'm understanding that. For example, if I only do 100 sales in Michigan this year and generate $10,000, I do not owe taxes on that revenue and should not be registered in Michigan, correct?
@@byronjohnson1577 Thanks, I use WP/Woo. I just find it baffling that whenever I buy anything online I ALWAYS pay sales tax - How is it that every business is exceeding the threshold in EVERY state?
@@lodatomedia2604 Many aren’t exceeding the sales. Either they are scared and dont understand how this works. Makes you wonder if they are collecting and not even sending it in. Scary stuff. I’ve had to learn so much in three years about this and have so much more to learn.
Hi I'm interested to know at what $ amount I have to start paying sales tax? I have a new Shopify store selling in the US. Do I have to pay sales tax from day one? I live in Australia.
No, for most states, you start to pay when you pass economic thresholds. Our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download is a good resource for this. There is a chart in the appendix with the economic thresholds for all the states. - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi LedgerGurus, first of all thank you so much for the video it give me at least a little bit of how I deal with my tax, but there are some question that I really hope that you can answer it, pretty please. My prolog is I'm non US resident and a drop shipper of beauty tools, my supplier is in China but they have warehouse in US, my main costumer is in US, I do already have EIN for my LLC and ITIN for me as the owner/manager (for making Bank Account and payment gate away) and here some the question: 1. Due to in the process of making EIN and ITIN take way longer than usual (because I just get in January 2020 for EIN and in August 2020 for ITIN) I cant make any sales or income, Do I still need to pay any taxes for both my LLC or as Individual, if I still don't have any sales in recent year? 2. I just want to confirm, I saw in some the comment, that although you are a non US resident, but have LLC (in my case in Delaware), so I do have Nexus Taxes? which I obligate to register, collect, and remit sales tax in Delaware? is that right? but do I still collecting the tax in Delaware, if even in Delaware I still under the economic threshold? 3. In regards with Tax app like (Avalara, TaxJar, Taxify) do I need to use it before I start selling my goods or after meet the economic threshold I start to use them? or just because nexus taxes in Delaware, I need to use it before I start selling my goods because I need to collect and remit sales tax in Delaware? I terribly sorry if my question is a bit too long, I also hope that my question can help other people to, because for a non us resident is kind of complicated I am looking forward to hearing from you and thank you in advance.
1. If you have not had any sales, you won't have any sales tax obligations. We are not experts with income and business taxes, so we would defer to having you check with experts in that area. 2. This is correct. You have "physical nexus" due to your LLC being based in Delaware, so you will need to register, collect, and remit for customers in Delaware. 3. Here's a video on sales tax apps: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-1L7s6llWlRo.html. It is up to you when you would like to start using these apps. As your business grows and you start to have nexus in multiple states, it usually makes sense to use one of these apps. Otherwise, you'll just need to register, collect (by setting up sales tax settings on your channel(s)), and file and remit manually.
@@onshop7919 Hello, im also a non us citizen, how long did it take for you to get your EIN? and Do I also need to apply for an ITIN? for I am hoping to open my stripe account
Yes, but only after you hit nexus in each state. Download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" for more details. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
I'm really trying to understand this. I will be selling digital video content that people download. I live in CA and have an S Corp. 1. Do I still apply for a Sales Tax ID? 2. Since I'll be selling in all 50 states, do I set them all up to receive sales tax? 3. What about international sales?
Yes, if you are selling in all 50 states, you will have to deal with sales tax. However, you don't have to register with each state until you pass its economic nexus laws. We have an appendix with those thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can download it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. We are in the process of updating it, and when you download the current one, you're automatically on the list to receive the new one when it comes out. We don't work with international sales tax, so you'll have to get that info somewhere else. :)
Every state is different, but in general many follow the threshold that was established via the South Dakota vs. Wayfair ruling in 2018 which is $100,000 in sales or 200 transactions per year. Be aware that nexus can also be established in other ways, but that is the economic volume that is most common.
@@LedgerGurus Hi, what happens if you don't claim nexus, but then all of the sudden you get 200 sales in one state, does that mean you now owe taxes even though you did not collect sales tax, due to not thinking you had to?
So I have some good news for you. "200 sales" are the threshold at which sales tax is required. You are not required to pay for those sales, but you are responsible for sales tax on all transactions after that. And congratulations on the increased sales! We are coming out with a sales tax course specifically meant to teach small business owners about how to navigate the world of online sales tax. For more information, click here: ledgergurus.com/resources/sales-tax-course-updates/
Question: a georgia based online business has nexus only in GA. The website seems to be only collecting taxes from customers ordering from GA, as it’s supposed to. But once Instagram Shop was enabled, transactions from Instagram shop Is collecting sales tax even from customers outside of GA. Now as a GA based LLC the sales tax permit is only for GA. What is the seller supposed to do with the sales tax that Instagram Shop collected from customers residing in multiple different states?
Oh man, that sounds like a pain! You can register for sales tax and remit in all the states where you collected. Then de-register after remitting. Or you can simply refund the sales tax collected back to customers. We would make sure those settings are correct moving forward!
Hello, thank you so much for taking questions. If I am in state a, and I only have nexus in state a, but all of my sales are from a company in state b, paid via mailed check from state b, and then I ship those items to state b, I don't have to worry about sales tax as long as I don't reach economic nexus in state b? Should I register for sales tax in state A, just in case I get a customer from within my state?
Yes, you should not have to worry about sales tax in state b. Once you anticipate you are close to getting sales in state A, then you could go ahead and register. If you are uncertain and could get sales at anytime in state A, you could register to be safe. That way you can collect from customers, instead of paying out of pocket (if you weren't registered to collect). Also, from your description it sounds like you may be selling to another business. If they are reselling your product (you are acting as the wholesaler), wholesales are typically not subject to sales tax. We wanted to mention that in case its applicable.
Thank you for the content on your channel and the free download. In the appendix to "10 Steps to Ensure Sales Tax Doesn't Burn Down Your Ecommerce Business", the threshold for economic nexus in Kansas is $0.01. As a new Amazon seller not based in Kansas, it would seem I should register and report to state of Kansas if I even have one sale there. Is this correct, or is there still a sales volume to that state where I should worry about registering, collecting and remitting sales tax?
KS does not have a threshold for remote sellers, so legally if you have one sale into KS you should register and remit. However, KS' GA does not agree with their Department of Revenue, so I don't think this "no threshold" will be enforceable.
Short and sweet, fantastic content. Now I'm wondering if what you said is for international sellers who are selling or planning to sell for the USA...(and ship from aboard) - if the answer is yes there are some more or new updates regarding the tax matter to its the most updated "data" on this matter?
Hi! If you are an international seller, you still need to think about nexus (physical and economic). The nexus laws applies to international sellers as well.
@@LedgerGurus hi thanks for your response , I’m wondering if hiring someone on upwork etc is also considered as part of the nexus matter or because it’s on some platform that collect the tax/Vat etc it’s fine and won’t make me have to care this nexus matter ?
In general hiring someone on Upwork or similar platforms would make them a 1099 contractor and not establish nexus. Watch video W2 vs 1099 Employees for details ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-1D673xjwdhk.html
@@yovelshoval5139 it depends on whether that person is “actively creating a market for you”, ie whether they are a marketing role. If they are an admin role, they most likely won’t create nexus for you.
I am an existing ecommerce seller (an LLC), registered with my home state, and currently sell only with Marketplace Facilitators (eBay, Amazon, Bonanza, Walmart, Etsy, etc). I file in my state and indicate the overall sales numbers and indicate that all the sales are through Marketplace Facilitators. If I open a Shopfiy or Bigcommerce site and start selling to customers directly, would the threshold information and overall sales for those thresholds consider my Marketplace Facilitator sales as well?
Yes. You need to add all your sales from all your channels to determine nexus and registration/filing requirements when you sell on any channel other than marketplaces only.
If ever Shopify seller collected sales tax for a buyer online but does not remit that… economic nexus was not yet reached.how will that be presented in the sales tax return? since it is an online payment, should the payment be returned to the buyer? what will be the treatment?
If I understand correctly I don't collect the taxes unless I have a considerable amount of $ in a state. For now, I pay for it myself. Is it the same in Canada?
You don't have to remit taxes in a state you don't have nexus in, so that means you shouldn't have to be paying it yourself. If you're that small, and you only have physical presence in the state your business is registered in, you probably don't have nexus anywhere else. That means the only state you need to worry about collecting and remitting in is your home state. And you should be collecting that, not paying it out of your own pocket. That's probably a good bit of your profit margin going down the drain. For more details, I suggest you watch our free masterclass "The Uncomplicated Truth about Sales Tax." You can access it here: ledgergurus.com/resources/sales-tax-masterclass/ We only work with US-based sales tax, so we can't help you with Canadian taxes.
Hey! What should i do if i have an ecommerce business and use TaxJar, but have made the mistake of collecting taxes in states without nexus and have remitted taxes in those states? How can i pay that sales tax back without having a tax id in those states. Also, if i have missed the deadline to file?
Sorry, I’m not sure I understand your question. How were you able to remit taxes without registering in those states and having a state ID? Generally, when you collect sales tax where you don’t have nexus, you either refund tax back to the customers or you need to register with the states first and file back filings for the past periods. TaxJar doesn’t support back filings currently. You will need to use a different solution or do it manually.
Hello LedgerGurus, I had been watching a few of your videos, all very informative. Thank you. I have some questions and hope you can help me: 1. I am a non US Citizen. I am planning on selling online via Shopify using a 3PL fulfillment center based in FL. So, I guess I need to register for sales tax in FL since that is where my 3PL is based? 2. I have not started selling yet so, do I need to apply before I start? 3. My other question is, do I need to register for EIN or ITIN as a company or individual for other tax requirement? Thank you for your time.
Having a 3PL handle your inventory does create nexus in FL. If you have nexus in other states then you need to register before collecting tax but not before selling products. And our clients usually register for an EIN.
@@LedgerGurus Thanks. I just want to Make sure I understand it correctly. I will have inventory there stored in a 3PL warehouse. And the 3PL despatch the goods for me as and when I get orders online. So, do I need to collect sales tax in FL as I think that is my Nexus even though I am not a US citizen or living in the US?
@@senoraTam Thanks for following up. We read through that question too quickly. Because your 3PL stores and handles your inventory, this does create nexus for you in FL. Thanks!
Hi, As i know Delaware has no sale tax. Does a LLC E-commerce company in Delaware owned by a non-resident person without a physical location have to pay sales tax when selling products to US customers from another states like Wyoming etc. ? Also The products will be shipped from China Warehouse.Thank you in advance!
Hi, If I am selling through Amazon, what is my registration and filing liability in these two cases: 1. Home State: PA, Inventory in Amazon centers CA, CT, IL. No economic nexus thresholds met 2. Home State: PA, Inventory in Amazon centers CA, CT, IL. Economic nexus thresholds met in GA, MA, NC, TN Please help
Because you're only selling through Amazon, the marketplace facilitator laws are in effect and you are pretty much off the hook. The only state you need to worry about collecting and remitting in (Missouri) is not one you have nexus in yet. Watch it, though. If you end up with inventory there, you'll need to deal with sales tax there. Their economic nexus law doesn't go into effect until 1/1/2023. If you'd like more detail, you can watch our on-demand webinar "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." - ledgergurus.com/resources/sales-tax-course-updates/
I`m a new retailer can someone answer this.When people try to purchase taxable items on fodd stamps like soda and nutrition items , should we charge tax on them or no ? if we don`t them we are not paying sales taxes on these items and that can trigger an audit ?
According to this, no - ask.usda.gov/s/article/Can-sales-tax-be-charged-on-items-I-bought-with-Supplemental-Nutrition-Assistance-Program-benefits#:~:text=Oct%206%2C%202022&text=No%2C%20retailers%20cannot%20charge%20sales,Assistance%20Program%20(SNAP)%20benefits.
Hello, thank you for your video. I have a few questions. I plan on selling on Amazon but I will not be doing FBA. I live in New York, and I will register my business and get my tax certificate in New York, should I only collect taxes from customers in New York? Won’t amazon be collecting the taxes for me, and if they do, will they collect taxes in most states even if I don’t have physical nexus and a tax certificate in those states?
Yes Amazon will be collecting because as a marketplace facilitator they have nexus in all the states. You still need to file a return in NY but you won’t owe anything. Please watch my video on how to file a $0 return for amazon sellers.
My husband has an etsy shop, but just recently started selling on shopify. We are in Colorado and he makes everything out of our homes garage. He does not have a physical location besides our home and he does not work with any manufacturers. Does he still need to register for sales tax license? Thank you for your time!
I would only register in CO for now! And watch my most recent video it addresses your question: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-CV0awU-Qi5Y.html
Hi there, thank you for this video! My dropshipping eCommerce is based in DE. I sell only on my website, not Amazon or Shopify. My suppliers are charging sales tax from me but I'm not sure if I should charge it back to my customers. Can you please help me understand the sales tax scenario for a drop shipping eCommerce that sells exclusively from its website? Thanks for your time!
Hi! Yes definitely! You can provide resale certificates to your suppliers so they stop charging you tax. You can voluntarily register in those states and start collecting tax or I would increase your price to your customers to cover that cost if you are not able to give them the resale certificates or register in those states.
@@LedgerGurus thank you for your attention! So if I'm not registered to the customer's delivery state, I can not repass to my customer the sales tax the shipper charged me, correct?
so for someone just getting into e-commerce, I don't have to worry about sales taxes until I start getting sales? or should I already have it ready just in case?
When you're just starting out, the only state you need to worry about registering in is your home state. When you make sales there, you'll need to charge sales tax and remit it to the state. You don't need to worry about charging sales tax in other states until you start approaching the economic thresholds. For a complete and updated list of those thresholds, along with valuable information about doing your sales tax properly, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can find it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ As you get further along in your business, sales tax will get more complicated, but you don't need to be afraid of it. We have several levels of help for ecommerce businesses - DIY (How to Do-It-Yourself -> an email crash course with links to articles and videos like this one), DIWY (Do-It-WITH-You -> a sales tax course where we teach you exactly what you need to do and give you access to experts who can answer all your questions), and DIFY (Do-It-FOR-You -> for when you are ready to outsource). We are happy to help you because our goal is to help as many ecommerce businesses be successful as we can. DO NOT set up your channels to collect sales tax until after you pass the thresholds. You don't want to register until after you pass them because it'll cause all kinds of problems for you, and it's illegal to collect sales tax without a permit.
You can use your SSN when applying for a sales tax license if you are self-employed or a sole proprietor. Sorry for the late reply! Please let us know if you have more questions.
Thank you for this info. If i am operating as a sole proprietor and selling tshirts out of my home through an online webstore and have no other partners anywhere and low sales because i am just starting, do i just register with my home state where i am working from? any info would be appreciated.
Hi, There is a business located in Delaware that outsources some of their consulting clients to an LLC located in New Mexico. The NM company does online consulting for Amazon ecommerce businesses so the clients are located in many different states. Since the NM company is being paid directly through the DE company, does that mean we only remit taxes to Delaware and NM? Since its destination, are we even responsible for any taxes to NM?
I don’t think you owe any taxes in NM or DE. DE doesn’t have sales tax and the consulting service in NM doesn’t create nexus for you. I would look at your economic activity to see if you have triggered economic nexus in any states.
Hello i like your video! But I have a question, if I live in the EU and create a company here, but I sell products online in the US, where do I have to pay the tax?
You will pay sales tax to the states you collect it from. After you pass a state's economic threshold, you have to register to pay sales tax there, and then you collect and remit that sales tax to that state. For more information about sales tax and for a list of economic thresholds by state, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi, I want to open a Shopify store where I will be selling goods online and shipping them within the u.s. I live in Utah and Utah’s nexus is if you have a physical presence in Utah, sell $100,000 or more, or have more than 200 transactions. I will be selling items from my house so does that mean I reach the nexus guidelines? And also when I am charging sales tax Will I only charge sales tax if I sell to someone in the same state as me? Or will I charge the sales tax of Utah to every state? Or will I charge different sales tax for each State? I am really confused and haven’t quite found the answer I am looking for online. Thank you!
It sounds like I have a physical nexus in Utah so do I start charging Utah sales tax to people that purchase who live in Utah and purchase from Utah? Or do I wait till I hit both physical/economic? Or do I not worry about either until I hit 200 transactions.
@@emijcallister hi! You will need to charge utah tax to customers in utah from your very first transaction because you are physically located in utah. For other states’ customers, don’t charge sales tax until you pass the economic nexus threshold in other states and that you’ve registered in those states.
Hello, Do I have to collect taxes on loose leaf tea sold in my new Shopify store from the state of PA.(no sales made yet?? Dry tea has no tax, but I don’t know if that changes when shipping to other states. Thank you
It depends on the state. For now if you are not making much sales yet then you shouldn’t pass economic nexus threshold to have the requirement to collect in other states.
If one lives abroad, and drop ship to the United States from a supplier who does not have nexus (no warehouse, or other presence in the United States) one is required to collect and pay sales tax after reaching the particular state´s threshold of economic nexus. I think I understand that part. The question is if the supplier ships from the United States (and thereby have nexus). Are you in this case required to pay sales tax ( for customers within that nexus state)?I can´t get a clear answer. Some say that the supplier, who in this example have nexus, are required to pay sales tax on the transaction. I find that hard to believe, since the supplier doesn´t know the selling price, nor does he/she have a relation to the buyer.So, would we as a seller be required to collect sales tax due to the situation above, before reaching the economic nexus?Also, when collecting sales tax due to economic nexus in a state if is from the point threshold and on, right? One cannot be required to pay sales tax retroactively, right (for the sales that was prior to reaching economic nexus)? Super grateful for help in this matter :) Thanks for the valuebomb :)
You are right that the supplier is not obligated but the seller is because the transaction between the seller and the customer is the one that creates economic nexus. The supplier should technically charge the seller tax if not provided with a resale certificate from the seller. And yes economic threshold is not enforced retrospectively.
Hi, thank you for your videos, we are creating a new Ecommerce Business, based only in Virginia, this means that I will not collect taxes when I sell to other States? The tax should be determined by the ship to address and I won't paid taxes in Virginia or New York, if I ship to NY for example? did I understand correctly?
Yes. You only need to register for a permit and collect sales tax in states where you have nexus. And sales tax is determined by the Ship To address when being shipped from out of state.
I’m based in GA with an LLC. I sell on eBay/poshmark. Those companies are collecting sales tax on behalf of the buyers state. Do I only collect Sales tax for GA buyers?
Yes but since they are collecting and remitting for you, you don’t owe the state anything. You might still need to report the sale and take the whole amount as a deduction though.
Hello I have an auction house in Iowa. But sell online as well. Im registered in Iowa only. My accountant does not know how to structure it. Do i collect sales tax from everyone out of state and just pay it to Iowa? or do I only collect from Iowa Residents? Or Do I have to register in all 50 states? This seems way to complicated. 😔
Hi! We are here to help! You don't need to collect in other states until you pass their economic nexus threshold. If you have more detailed questions, feel free to schedule a consulting call with us here so we can help you! calendly.com/ledgergurus-sales-tax
Hello, I just open a LLC in WY. I do not live in US, I don’t have stores or employees. Also I receive a couple of days ago my EIN number. I want to create a e-commerce store (print and demand system). As I understand if I do not have any store or employees I do not need to pay taxes. My concern is, if I sell physical products to US clients with the print and demand system (printful) do I need to collect the sales tax? And if yes, do I need to add the sales tax for all the states or only for WY?
Hello, so I started an online business with Shopify last year, I've made a few sales but nothing even close to the Nexus amount. I live in Washington DC and I hired a third party to start up my sole proprietorship. Since I asked for my tax ID (been a few months and still haven't received it) the state is now asking for me to file and pay quarterly. I don't know what to do. I have an accountant but she is not responding. What should I be doing?
Since you are physically in DC you should be collecting sales tax from customers with the ship to address in DC. I would download the orders report from Shopify and filter the ship to province to only include DC and see how much sale you need to report to the state. If you haven't made any sales to DC customers, you can report $0 on your quarterly returns.
I would register and collect taxes for customers in FL for sure because that’s your home state. Even though you use a drop shipper, I would still track your sales by state to monitor if you have economic nexus in other states.
Thanks for your expertise and willingness to assist! As a marketplace will I need to register with the Dept of Rev in every state that products are shipped/delivered to?
You need to register with the states you have nexus in. Here's an article that may help: www.salestaxinstitute.com/resources/what-marketplace-sellers-need-to-know-about-sales-tax-nexus
@@givkcmoney Correct, you have no sales tax obligations in that state. You should not be registered, collecting, or remitting/filing for sales tax in that state.
@@LedgerGurus what happens if I've been collecting taxes from my shopify store not knowing I didn't meet the threshold to do so? My business is registered in NY and NJ and I've had 116 tax collecting online orders over the last 6 months since opening. This information is all new to me. Thank you.
@@Stephintojoy You will need to either refund customers the tax collected or register with the states you collected tax in and remit them to the states
Yes, you only collect and remit sales tax in states that you are registered. You don't want to be collecting sales tax in states where you have not yet registered.
LedgerGurus thank you and one more question if i do have a lot of out of state orders and not collecting taxes on those will i owe at the end of the yr ?
You won't be liable for sales tax in other states, unless you have nexus in those states. The most common ways you would have nexus is if your inventory is held other states, you have employees in other states, or you have economic nexus in other states. Economic nexus occurs if you have a large volume of transactions and/or revenue in another states. Each state has differing thresholds, but if you are approaching 200 transactions or $100,000 in sales in any state, you should check their economic nexus laws. Once you have nexus, you are liable to register, collect, and remit sales tax in a state. If you don't, a State can come after you for the sales tax owed and associated penalties.
If the products I want to sell are digital downloadable documents/products (online courses, design posters, stickers) Do I have to collect taxes on those? I also want to start my business so I will probably not make that much money the first couple of months do I have to register my business? I am located in Idaho. Thank you
Downloadable documents are taxed differently in different states, and it mostly depends on the language you use to market these courses. For now, we suggest looking into those laws in regards to Idaho and register for a sales tax permit if necessary. You can always contact your Department of Revenue if you can't find a good answer. Then, you should monitor sales into other states. Once you approach $100K in annual sales or 200 transactions into another state, it would be time to start looking into their sales tax laws in regards to your type of product. You may need to start registering, collecting, and remitting from customers in those states. In regards to business registration, you should always register your business with the state you are operating from when you start your business, if you don't make money, you can claim losses using expenses and that'll help your overall income tax liability.
what happened If I moved and I ceased a location? I haven't sell for two years. I would like to sell again but I haven't file taxes for the last year? t's overdue and it doesn't allow me because it says I have no registered location. What should I do in this case? Do we still have to registered a location even when we sell online?
I'm not sure I completely understand your question. Did you have an ecommerce business before you moved or a brick and mortar business? You certainly do have register in your state when you sell online. Registering in the other states needs to happen after you pass the economic thresholds or have physical nexus there. For more information, you can download our free PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can access it here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
We live in Colorado and an online store thru marketplace and have clients pay sales tax so when I file I'm confused if already collected why do I have to report and what am I reporting? is it collected twice ? Cannot get ahold of Colorado dept of revenue to ask any questions! very disturbing. thanks
