3 Tips to Keep in Mind For Sales Tax Compliance

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Running your own online business is tough enough. Staying compliant with state sales tax laws makes things even tougher. These days online sellers are branching out, selling on multiple platforms like eBay, Amazon, Etsy, and Shopify in addition to their own websites. At the same time, states are changing sales tax laws so that more online sellers will be required to collect and remit sales tax.  That’s resulting in more and more businesses having to pay sales tax to multiple states.

Before you’re head starts spinning, here are some simple tips to keep in mind when it comes to sales tax compliance and your online business.

Determine if you have nexus
Nexus is a fancy word that means your presence in a state is significant enough that you’re required to collect sales tax. The two most common types of nexus are home office and inventory. Home office means you run your business out of your home. In that case you’re required to collect sales tax from customers in your state. Inventory nexus occurs when your inventory is stored in a warehouse. States like Texas, for example, will require you to collect sales tax from customers in their state.

Register with each state
If you have nexus in a state, you’re required to register your business in that state. Registering your business could mean acquiring a sales tax license, or a business license, but in either case the state wants to know that your business exists and will be paying them sales tax. This is necessary for every single state you have nexus.

File and pay what you owe
Once you’re registered as a seller in a state, it’s then time for you to begin paying the state what you owe. The frequency of your payments will most likely be based on sales volume (the more sales, the more often you’ll pay). Some states offer discounts for paying early, so be sure to take them up on their offer whenever possible.

TaxJar is committed to not only making sales tax filing easier, but also to help educate online sellers about all of the confusion surrounding sales tax. Stay tuned to the TaxJar Blog for answers to tough sales tax questions. To sign up for a 30-day free trial of TaxJar, please visit taxjar.com.

About Deborah Sweeney

is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.