It’s easier than ever these days for online sellers to sell products on multiple shopping carts and online marketplaces. But multichannel selling does add complexity to a business, and one administrative task that suffers is sales tax.
While I’m not saying sales tax is every simple, when you only sell on one channel you only have one report to pull and one set of numbers to wrangle into manageability. When you multiply that report, things start to get tricky.
States want to see your sales tax broken down not just by how much you collected in the state, but by how much you collected in every county, city and special taxing district in which you sold and item. As your business grows, trying to figure out which city is in which county and which special distract tax applies is totally unsustainable. And when you add different shopping carts with their sales tax reports in various formats to the mix (if they even have a sales tax report!), you can really pull your hair out in frustration.
Fortunately, there are solutions to make sales tax simple for multi-channel sellers.
3 Steps to Simpler Sales Tax
- Know where you have nexus – As your business grows, so do activities that cause your business to have “sales tax nexus.” Nexus is just a fancy way of saying “significant presence,” and when you have sales tax nexus in a state you need to register for a sales tax permit and collect sales tax from buyers in that state. As you expand to new sales channels, hire employees, and start up drop shipping relationships you need to be sure that you’re collecting sales tax in all of your nexus states. You can find out a whole lot more about sales tax nexus here.
- Set up sales tax collection on all channels – Not all shopping carts are created equal when it comes to setting up sales tax collection. Some make it very easy, while others treat it as an afterthought. If you aren’t careful, you could set up and begin selling without being properly set up to collect sales tax in all of your nexus states. TaxJar’s Expected Sales Tax Due feature can help you determine if you’re collecting sales tax improperly on one of your platforms. Or if you need help setting up sale tax collection on one of the popular marketplaces, check out our sales tax guides.
- Use automation to simplify your life at filing time – Remember how I said states want you to break down the sales tax you collected at a granular level? Technology to the rescue! A sales tax automation app will do all that work for you, and even take sales tax completely off your plate by filing your sales tax returns. Don’t spend another second entering numbers into a complicated spreadsheet or poring over state tax tables. Automate your sales tax and get on with your life!
I hope these tips have helped! If you have more questions about sales tax, check out our Sales Tax 101 for eCommerce Sellers guide.
TaxJar is a service built to make sales tax compliance simple for eCommerce sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!