They say “want to make God laugh? Tell him about your plans.” Since COVID-19 has entered our common life, millions of people all over the world have had to change the way of their usual life in 120 degree.
As a result, people had to cancel lots of important events and start living with the virus side by side. Moreover, COVID-19 is the reason that lots of small businesses and popular brick and mortar stores were closed, and why most business owners have made the crucial decision to migrate into e-commerce. Even most restaurants have closed their doors and have started offering delivery services.
But, the main changes have touched brick and mortar stores, since they had to start selling online in order to save their business. As a result, most sellers face different issues, and the most crucial one is how to handle sales tax. That’s because sales tax is completely different when you sell online. Read this blog about Sales tax 101 for online sellers.
Therefore, Prestige Auditors are going to bring to your attention the main differences between online and brick and mortar sales tax.
About Your Physical Location!
It is a general rule of thumb that sales tax is charged based on the state where your business is located. Moreover, local counties and cities can add additional taxes on their part. But, if you sell items from the fixed location of your online store, you will have to charge the same amount of sales tax to your buyers. You should also keep in mind that the final amount of sales tax that you are going to charge to your customers directly depends on the address where you are going to ship your orders. You can read this blog and find out a list of states with worst sales tax rates.
But, we have good news for you, since if you really intend to start selling online, the platform that you choose takes full responsibility for charging sales tax to your customers on your behalf. Keep in mind that you have to inform the platform that in which states you are going to operate and collect sales tax.
If you are a brick and mortar seller, then you should be aware of the fact that you have to register for sales tax permit in order to start collecting sales tax from your customers. The main reason is that retailers usually have sales tax nexus in the state where their business is located.
As an online seller, you can have online nexus in different states based on a certain state’s requirements concerning sales tax nexus. So, if you succeed in your online business and your online sales start showing good results, then you have to register for a sales tax permit and start collecting sales tax from your customers in more states.
States Where Shipping is Taxable
Here is the list of the states where shipping is taxable:
- Arkansas
- Connecticut
- District of Columbia
- Georgia
- Hawaii
- Illinois
- Indiana
- Kansas
- Kentucky
- Michigan
- Minnesota
- Nebraska
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Pennsylvania
- South Carolina
- Tennessee
- Washington
- West Virginia
- Wisconsin
States Where Shipping Is Not Taxable!
- Alabama
- Arizona
- California
- Colorado
- Florida
- Idaho
- Iowa
- Louisiana
- Maine
- Maryland
- Massachusetts
- Nevada
- Oklahoma
- Utah
- Virginia
- Wyoming
You should keep in mind that each of the states has completely different requirements and laws when it comes to charging sales tax on shipping. Therefore, it is better to read your individual state’s requirements concerning sales tax.
When you run your business from a certain location, the process of filing your tax is pretty simple. All you need to do is login to your state’s sales tax filing system and submit the amount of sales tax that you have collected from your customers during a certain period of time.
However, when you start collecting sales tax from your customers on a state level, the process of filing seller tax can become a little bit harder. In this case, we strictly recommend that you reach out to Prestige Auditors and we will help you handle all the issues concerning taxes. Our tax experts will detect the exact amount of sales tax that you have collected from your customers and help you file a sales tax report in a proper manner. You can visit our website where you will find more information about our company and the services provided by our team. For example, for online sellers, we have the following services:
- Amazon Sales Tax Exemption
- Forming LLC for Online Business
- E-commerce Taxation Service
And there’s more where that came from! Give us a call now and let’s get things going!
66 West Flagler Street Suite 900 – #6076,
