Categories: Tax Advice

3 Tips to Keep in Mind For Sales Tax Compliance

This post is brought to you by our partners at TaxJar – an online tool built to make sales tax filing easier for online sellers.

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.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration.

Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law.

Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others.

Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.