The 20^th of every month, every 3^rd month, every 6^th month, on annually; this sales tax due date will loom over you and penalize you if you are late! Selling online and sales tax can be very difficult for anyone to understand. Some old school accountants might even wonder and have to search for the answer on this messy and complicated but required business practice you have to perform. Basically, if you sell on Amazon and have Fulfilled by Amazon (FBA), you probably (if not 100%) have to pay sales tax in that State, County, and City.

Since FBA allows you and Amazon to ship products to customers within 2 days, Amazon places your products across the country closer to all your (Amazon’s) customers. If you are new to FBA or been selling for a while, you might have already been required to collect sales tax and be paying that state. Yes, we know your business is not located in a state that has no sales tax for Amazon purchases, but your business and product is national and you have product all over the US via FBA.

What happens when Amazon gets your shipment in? You might ask, I shipped everything to North Carolina and they don’t require a sales tax. Amazon FBA opens your box of goodies and leverages their mass network of warehouses across North America. They break up your units shipped to them and send them all over. They want to be able to ship an item to a California resident from a warehouse in California. This saves Amazon on shipping rates to. Ever seen one of those Amazon trucks? It could be carrying your products from one of their warehouses to the next waiting for a happy customer to place their order. Amazon FBA feature also allows Amazon to fulfill your 3^rd party sales channel orders. Know how to do this? We talk about it here.

Love Amazon FBA? Of course you do but quickly you will see the con of FBA called, Sales Tax Nexus. Have to say, all the benefits of having these services outweighs the burden of sales tax.

We’ve mentioned sales tax nexus a few times, so what is it?
Nexus: Sufficient physical presence.
Basically it’s a legal term that describes having physical products an out of state company has and is doing business (selling) in that state which would require to collect and PAY tax in that state.

If you want to read more about nexus and your possible obligations; we suggest checking out the pages of articles on taxjar.com

Without getting too deep into politics, states, counties, and cities survive off taxes to pay for this or that program in their respected geopolitical location. So, charging sales tax is the perfect way to generate income for that government office. Nexus as always been around to describe in state sellers, but now the definition has expanded and includes the online seller or out of state business.

Raise your right hand and say sadly, I have nexus and will agree to collect and pay sales tax. Now the fun part begins. You must go onto the various states that require you to collect and pay sales tax and register for a sales tax ID. Once registered you must submit your sales tax ID to Amazon. On your Amazon Seller Central page, Settings -> Tax Settings -> “View/Edit your Tax Calculations” -> enter in your sales tax ID for that state -> Review Changes -> and just follow the continue and accepting pages.

Now, why are we telling you this? With Add to Cart Consultants, we offer warehousing within the state of Florida and provide international shipping from China to the US that might come to our warehouse before getting sent to Amazon or another 3^rd party. When you fill out your sales tax information, you are going to be asked when you had Nexus in that state. Since Amazon won’t charge sales tax until you have a Sales Tax ID, you will be paying for this uncollected tax out of the profit you make on your goods. What if you don’t apply nor tell the state that you sell as an out of state business to one of their residents? They will eventually catch on and ponce on you like a puma. I personally don’t want a puma pouncing on me. They will latch on and keep on you until you pay with interest and penalties, which might be worse than a puma.

With our fulfilled by merchant services, you will also be required to charge sales tax for shipments we provide for you. The good news is, when selling on Amazon, either FBA or FBM, Amazon will charge for you sales tax. You don’t have to make any changes here to offer FBM to potential customers. Being able to offer FBM to our clients expands their ability to sell on other platforms like Amazon.ca, .uk, .com.mk, sears.com, jet.com, ebay.com, etc and etc. Since you are set up with sales tax ID and you have the products here in the US, we are here to help you expand your business into other arenas to showcase your brand and products. We do all the tracking, shipping, and reporting to the platforms so that both the software and customer knows their order has shipped.

Haven’t had enough sales tax information and still have questions? Here are a few links to some tax software sites that can provide more info or answer some questions for you. Also, please feel free to send us any questions you might have at Add to Cart Consultants Contact us.

Taxjar

Avalara  

Taxify

Vertex SMB

Next Step:

1. Locate where your inventory is and when you established Nexus
2. Determine if your product is a taxable product
3. When are you required to pay sales tax (you might owe for back months)
4. Are you monthly, quarterly, semiannual, or annual?
5. Should you file your sales tax or have someone like Taxjar auto file for you or your accountant.

We are here to help point you in the right direction and get you the resources needed to succeed in your business. We are more than just someone people moving boxes, we can help with your shipping logistics, inspections, labeling, and even a little knowledge on tax law. We look forward to hearing from you and helping your business grow.

We are, by no means, state sales tax CPA’s and all info should be checked with your accountant.