How to Get Sales Tax Compliant in 2017

We get it. Feeling confident that you’re handling sales tax correctly can be tricky. With different rules, rates and sales tax filing due dates in each state, it can seem like sales tax compliance is the never-ending business chore of every product seller.

If you’re questioning whether or not your business is sales tax compliant, this post will help.

If You’re Just Getting Started with Sales Tax

Determine where you have sales tax nexus – In the U.S., you only have to collect sales tax from customers in states where you have sales tax nexus. Sales tax nexus is a fancy way of saying “significant presence” in a U.S. state. Factors like a location, personnel or inventory stored for sale in a warehouse create sales tax nexus in a state. You can read more about what creates sales tax nexus in every U.S. state here.

Get registered for a sales tax permit (or permits) – Once you’re determined you have sales tax nexus in a state, your next step is to register for a sales tax permit in that state. Don’t skip this step in any of your nexus states, because most states consider it illegal to collect sales tax from buyers without a permit!

Collect sales tax from your buyers on all of your sales channels – Once your sales tax permit is in hand, set up your online shopping carts and marketplaces to collect sales tax from buyers in your nexus states. We have guides on setting up sales tax collection on all of the most popular eCommerce platforms here.

If You’re Already Collecting Sales Tax from Customers

Double check your nexus – As your business grows, your sales tax nexus can often change. For example, maybe you hired an employee in another state. Evaluate your business activities and determine whether or not you have sales tax nexus in a new state. This “When to Register for a Sales Tax Permit” guide can help you determine when to collect sales tax from buyers in a new state.

Further, you may find that you no longer have sales tax nexus in a state. If that’s the case, you can cancel your sales tax permit. Just be sure to double check with the state to ensure you won’t have “trailing nexus” and still need to collect sales tax for several months after your nexus in the state has ended.

Check for rate changes – States often change their sales tax rates at the beginning of the year or in July (though they have been known to change them at any time during the year!) If you have any custom rates set up, January is the perfect time to be sure those rates are still correct. eBay is one place where sellers often set custom rates, so if you sell there be sure to check that you’re still collecting the right amount of sales tax from your buyers.

We hope this quick checkup has helped you feel more confident about sales tax compliance! For more about sales tax, check out our Sales Tax 101 for Online Sellers guide or start a conversation over in the Sales Tax for eCommerce Sellers Facebook group!

TaxJar is a service that makes sales tax reporting and filing simple for more than 5,000 online sellers.  Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!