If you are an e-commerce seller, you should be extra careful when it comes to filing your taxes. If you don’t file your taxes in due time, it may lead to very serious issues in your e-commerce business.
Your Income and Spending
We at Prestige Auditors strictly encourage you to have a separate bank account for your FBA business. It will make the process of running your business easier when you are preparing for your taxes. Another crucial part is that you should have at hand all the invoices from your suppliers, with whom you have been working during the year.
- There are several tax deductions for Amazon FBA sellers, ranging anywhere from the cost of the goods, to fees paid as commission, fees paid for FBA subscriptions, shipping, office products, health insurance, and others.
Try to ensure that you are keeping all the copies of your documents to simplify the process of your FBA tax deduction.
As you know, you should file your sales taxes in states where you have a nexus. However, if you are an Amazon FBA seller, Amazon collects your sales taxes on your behalf. So, you can be sure that all your sales taxes are filed in due time. It will help you avoid any penalties during your business operation.
What is Nexus?
Your presence or connection to a state is referred to as a nexus. Generally, it is the place where Amazon FBA keeps your inventory, among other things. Logically, you can have a nexus in each of the states which include Amazon Fulfillment Centers You can also have a nexus in the state where you currently reside. Amazon has its Fulfillment centers in nearly 20 states, which means that you have a nexus in more than 20 states, if you sell through FBA
Which States Charge Sales Tax?
There are several states with no sales tax. So, if Amazon has its warehouses in those states, you do not have to pay sales taxes there. Among the states which do not have sales taxes are: New Hampshire, Oregon, Alaska, Delaware and Montana.
Keep in mind that the penalties for missing sales taxes are very high in states that do have sales taxes., Therefore, try to ensure that you are filing your taxes in timely manner. Or, you can trust this process to our professional tax experts from prestige Auditors who are ready to handle the process of your filing your taxes on your behalf.
Filing Federal and State Tax Returns
Your next step should be filing your federal and state income tax returns. The state in which you are running your business is the state where you have registered your business. You have to pay state income tax completely in every state; however, there are some exceptions, such as Florida, Alaska, Nevada, South Dakota, Texas, Wyoming and Washington.
Calculating Your Net Income
Your net income is based on your income from your sales, after you take out all the taxes and various deductions. Once you separate the amount of your tax from your income, you will be left with the net income. You have to be completely transparent with the IRS when it comes to your net taxes. It will help you reduce the possibilities of audits that are conducted by the IRS.
How Prestige Auditors Can Help you with Your Amazon FBA Taxes
According to the above-mentioned, you can see that filing sales taxes is crucial for your FBA business. However, if you do not have experience in dealing with taxes, Prestige Auditors can assist you in the process. Moreover, we will run a sales tax analysis of your business to make sure there are no nexus triggers which you are unaware of. Thanks to the efforts of our professional tax experts, we can help you not only with your tax filings, but also reduce them by choosing the best tax deduction specifically for your FBA business.