With an online business or store, navigating certain aspects of e-commerce can be overwhelming. This is especially true if you aren’t clear on all of the rules and obligations required to meet as an online business owner. To get a better understanding of the wonderful world of e-commerce, it’s beneficial to contact your state for more information and research important aspects of e-commerce, such as calculating and collecting sales tax. That said, to assist you further, here’s a brief synopsis of things you need to know about sales tax if you’ve recently started a business online.
Set up your online business
Overall, with an online startup, you have to deal with the standard business taxes that brick-and-mortar stores have to deal with—estimated taxes, employment taxes, and sales tax. But then, be that as it may, sales tax for online businesses is actually a little different than it is for companies that operate out of physical storefronts.
Moreover, there are five states in the US that don’t charge sales taxes—Alaska, Delaware, Montana, New Hampshire, and Oregon, which can complicate online business sales even further.
Sales Tax Online
Nevertheless, to figure out your sales tax on Internet sales, you first need to define your business’ nexus. A sales tax nexus determines whether a company has a significant presence in an area to collect sales tax. After ascertaining your nexus, you need to determine whether applicable states are origin-based (seller’s location) or destination-based (buyer’s location). Once you’ve determined whose location applies, then you can calculate the sales tax rate(s). If you’re looking for a quick and easy way to calculate sale tax online, then go to https://taxfyle.com/sales-tax-calculator/ and get your sale tax figures with a click of a button.
Sales Tax Permit
After figuring out your nexus and appropriate rates, you need to obtain sale tax permits for those particular states. Once you acquire your permit, you can collect sales tax from applicable customers each time they purchase. Remember to keep an eye out for sales tax holidays. Some states have them, and some don’t, so make sure you pay attention to this exemption.
Report and Pay Sales Tax
Lastly, you’re responsible for keeping track of the sales tax liability that you remit to your state. That said, you should be given an exact due date and directions on how to file sales tax from your state. Usually, your filing frequency is based on the number of sales you make, and sales tax filing can be monthly, quarterly, or yearly. Finally, it’s also your responsibility to report sales tax to the applicable agency. To find out your specific sales tax responsibilities and frequencies, check with your state, and speak with your business tax professional.
Ultimately, this may seem like a lot to take in at first. However, once you get a better understanding of state laws on sales tax, the entire process will be less stressful.