I cannot believe this video does not have more views. Incredibly clear in comparison with any online written explanation. And you answered the follow up questions I would have had. Thank you!
you are so comforting! thank you so much! For someone who is trying to do the right thing with taxes before I start it can seem so overwhelming that it almost freezes a person up! You made it so understandable that I feel relief and feel like I can move forward and just get going! It would be awesome if your company handled accounting and tax help for artists and others that sell online and in person at art fairs and flea markets
Sorry! We don't do income tax, but we do offer ecommerce accounting. If you're interested in our services, click here: ledgergurus.com/ecommerce-accounting-services/?TH-cam&
@@LedgerGurus Hello I want help I want run online print on demand bussniness I live in India but I want run bussniness in usa though printfy and Shopify so I need collect sales tax and any legal issues please reply me I want really help
Thank you for this video. Watching this one video gets a subscribe from me. I published my first ebook on Google play and nobody there (on their chat) was able to tell me about state sales tax and what I'd have to do. Thankfully, you have made it very clear that I won't have to worry about it since I will be selling my digital products on Google Play only which is a market facilitator.
This video was incredibly helpful! I just started an e-commerce business recently and wasn’t sure about how to charge sales tax (or if I even needed to!) Thank you for answering all of my questions!
Thank you so much for confirming in a concise and clear manner. My county senior investigator called me and said things which are wrong you just explained the points. I urge everyone to watch this even county does not know their own rules.
Thank you for this info just started an online business with a marketplace facilitator and I don’t have any ideas on taxes so I’m having 2nd thoughts but this video inspires me to push through on my business, hoping I can get sales soon.
thank you for this, I live in Oregon which does not charge sales tax but i want to ship products to other states. Well under the 200 threshold for sure. good to know i dont need to worry about this for a bit.
This is super clear! just a follow up question - if one only sells via marketplace facilitator, one only needs to report and remit to home state (i.e. physical presence), right?
No, you still need to know where you have economic nexus, and Amazon FBA may make it so you have physical nexus in other states, as well. You'd only file $0 returns in those states since the marketplace is remitting the tax, but you do have to register where you have physical and economic nexus.
Well that helped some, still have questions though: -If I live at home and sell art prints (physical product) from home on my online website to buyers that live in my state and other states, do I have a nexus? For example purposes, let’s say I live in Florida and someone living in New York buys an art print from my personal online website, which I then have to ship to them: -How would sales tax work here? -Is the sales tax percentage I collect from them the amount required by Florida (where I live, I ship from) or the sales tax percentage required from New York (where they live, I ship to)? -Am I remitting the sales tax amount collected to my own state (Florida, where I live and shipped from) or their state (New York, where they live and I shipped to)? -Does use tax play a role here or not? How?
1) You have nexus in Florida because you have a physical presence there. Physical nexus is created by people and property. Unless you have one of those or you've passed the economic threshold in other states, you don't have nexus there. 2) Until you pass the economic threshold in NY ($500K in gross sales in a calendar year), you do not have nexus there, so you don't charge that customer sales tax. 3) Sales tax is charged and remitted according to where the customers lives, not where you live. So, if the customer is in NY, you'll charge NY sales tax once you have passed the economic threshold there. That sales tax would be remitted to NY, not FL. 4) Use tax is a bit different, and goes by different rules.
Thank you for our kind explanation! Here's a quick question. If our company already registered in a state as of the beginning of last year but the sales volume in the last year didn't get the economic nexus threshold at the end of the year. Then can we deregister our business in that sate? If so, how to do it?
Great video. How about how to avoid paying tax on purchases for resail or for POD? Like if purchasing ordering from Printify do I need to fill out an exemption for every state? Or the state I have a Nexus in? Or the states Printify has a Nexus in? Lol
Here's a video that explains what you need to know about sales tax for dropshipping: th-cam.com/video/suUqOj3bhvs/w-d-xo.html&lc=UgwNKf6VFwu8BTZD9VJ4AaABAg
Thank you for such a helpful video! I am just starting my business and will likely not hit those thresholds for economic nexus for a while. However, I have read a bit about notice and report laws and am quite confused! As a non-collecting seller, in some states, are we required to inform our customers that they have to pay use tax? How do we find which states these are?
Yes, you should. We recommend adding a note to your invoices that customers outside your own state may be required to remit use tax since you're not collecting sales tax yet. You will need to register and collect for your own state since you have nexus there.
I have gone over the $100k threshold but $90k of it was sold to other companies for resale so they are exempt. Does that keep me in the clear? Per your video I do believe so..
Yes, that is typically correct. However, sales tax rules vary by state, so it's important to check the specific regulations in the states where you have nexus.
We have a whole section on it in our sales tax course (ledgergurus.thinkific.com/courses/sales-tax-roadmap-made-simple) and you can also look it up on Google.
Thank you for the informative video! I’m planning to partner with somebody in China to do a cross border e-commerce business in Oregon and I’m stuck on whether to do a LLC or incorporation to be the most beneficial for the owner. I was told that there’s a business model where the company will make a loss on its projects for the first two years. This would eliminate the 21% federal tax on the corporate level. LLC, when the loss, it will not involve your personal tax, if the profit, it will involve your personal tax need to pay the declaration. When INC makes a profit, the company pays a 21% federal tax. As long as the company doesn't pay dividends it won't affect your personal taxes. Which should I do?
I've read your guide and watched this but I'm still a little confused... Being based in MN, do I need to ONLY collect sales tax for sales made to other MN customers (assuming I do not reach nexus in other states)? Or collect MN sales tax on ALL orders since I'm based in MN and have to pay in sales tax on everything I sold from my MN base?
Great video and detailed explanation LedgerGurus! Your expertise is very helpful, especially with the details around marketplaces collecting and remitting sales taxes to the various states. Quick follow-up question on this. If we are already registered to collect sales taxes for a state and sell there directly as well as with a marketplace (eg, Meta/Facebook). Per your video, I'm assuming we can exclude any transactions done through the marketplace when we file and remit our sales taxes for sales done directly on our website? Just wanted to make sure we didn't leave out the marketplace transactions if they still need to be reported. Thanks much!!!
Hey guys! Short question, If I am a online dropshipper In Indiana with a supplier In China and I have no physical store, warehouse, or employees In Indiana/America, that wouldn't count as physical nexus right? Or would It count just because I live here and run the online shop here? Thank you so much🙏
Thank you very kindly for covering this material in such a simple, easy to understand manner. This is VERY helpful information and solved a great deal of confusion for me personally.
Thanks for this video. Gives good clarity. I have one question though. I use virtual address in Wyoming and i sell private label as amazon FBA seller. I know amazon is collecting sales tax on my sales but do i need to report NIL sales tax to Wyoming state ?
Amazing video, I’m still a bit confused My wife wants to start selling salves and holistic products on her own website. We use our house for physical storage, she’s the only worker and don’t foresee sales passing the economic nexus; should she worry about charging for sales tax
Yes, but the reason I came here is to find out how to actually collect sales tax. If you have to get state and local sales tax licenses prior to being legally able to collect sales tax, but the tax is based on the address of delivery, which is unpredictable in the case of online sales, then what licenses do I need and how do I do it correctly?
You do not need to get a sales tax license for a state until you have nexus there, whether through physical presence or by passing the economic nexus threshold in that state. For instance, if you are based in California, you need to get a California sales tax permit right from the start because you have a physical presence there. But say you have several customers in Utah. You don't need to register for a permit and start collecting sales tax in Utah until after you pass the $100K in sales threshold. You will need to pay attention to your sales channels so you see when you are starting to approach those thresholds. Start with our 10 Steps of Sales Tax guide. It will walk you through all of that, and there is a chart in the back with all of the states and their thresholds. You can find it here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello glad I found you. So I started an ecom business in January and got my first sale in May. I live in Washington DC. I haven't sold much yet and none of my sales have been in DC but I got a letter from the Office of Tax and Revenue saying I'm delinquent in reporting my taxes for quarter 2 ?? what do I need to do?
I would register for a sales and use tax license in D.C, use your first sale date as your effective date, and file $0 on your Q2 return, Q3 possibly as well since that was due last week. Let me know if you have more questions!
I have an important question. You said the sales taxes come into play after we reach $100,000 or 200 sales in that state so my question is is it per state? What I am asking is if I get 199 sales in the state of Florida and then 100 sales in Kentucky and 130 sales in New York and thats all I got for my online course that means overall I passed 200 sales but I didn't pass 200 sales in each state so does the sales taxes come into effect per state or overall the states combined sales?
The thresholds are different for every state. You can see a complete and updated list at the end of our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. The thresholds are PER STATE. So, even if you have 100 sales in Kentucky and 130 sales in New York, that doesn't affect whether you've passed the threshold in Florida. Now, just so you are aware, there is not a # of transactions threshold in Florida, like there is in a lot of states. You've passed the threshold once you've reached $100K in sales in the state of Florida. This is why I suggest you download that guide and check out the chart at the end. One more thing, while sales tax is only affected BY STATE, you do need to calculate the sales in EACH STATE from EACH of your CHANNELS to determine if you've passed the threshold. So, if you've sold $75K into Florida on Amazon, and $50K on Shopify, your combined sales are $125K into Florida, meaning you've passed the threshold. Amazon is responsible for collecting and remitting on Amazon, so you don't have to worry about the taxes on that $75K, but you DO need to collect and remit on the $25K you sold on Shopify AFTER you passed the threshold of $100K. Hopefully this helps.
Thank you so much! Love this. One clarification, if I am selling on a marketplace facilitator, I will still have to register in the states for #1 and #2, correct?
Just starting out.. selling online through my own website... are there any states that don't have a threshold where you would have to register immediately? Also, if I choose to sell through etsy as well.. do they collect and remit sales tax for you?
No. Every state that charges state sales tax (all but Alaska, Delaware, Montana, New Hampshire, and Oregon) have economic thresholds. The only states you have to worry about at first are your own state and any other state you have a physical presence in (anywhere else you have people or property). Etsy IS a marketplace and so is subject to marketplace facilitator laws, meaning they will collect and remit for you. For more info on everything you need to know about sales tax, download our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
I am dealing with a company that has CA stores and sells online from their home office in Wisconsin. The on line people calculate the CA sales tax rate accurately but apply it to both the tangible product and shipping and handling charges. When I try to inform them that CA exempts shipping and handling charges from sales tax, they get very huffy and ignore the information.
Thank you for this video! I have one Q. At the END of the video, I understand you to say that you ONLY need to collect sales tax in a state IF: (a) you have physical nexus there AND (b) you meet economic nexus AND (c) your product IS taxable AND (d) you are NOT using a Marketplace Facilitator. In other words, ALL of those (a, b, c, d) MUST be true for you to be required to collect sales tax. BUT at the 6:00 mark of the video, you say: "When you are first starting to sell . . . only worry about your phyical presence, where you have people, where you have your property. That's where you need to register and start collecting tax ON DAY ONE." So that makes is sound like if ONLY (a) is true, you MUST collect sales tax immediately even if you haven't reached economic nexus. Can you pls clarify that for me? Thanks!
You're close. You only need to collect in a state IF: (a) you have physical nexus there AND/OR (b) you meet economic nexus AND (c) your product IS taxable. If you sell through a marketplace facilitator, they should take care of most of your sales tax, but you'll want to check for home-rule jurisdictions in CO and AL.
Question: time into the video 7min 36 seconds I live in Pennsylvania. I'm selling T shirts on shopify and T shirts are not taxable. The threshold is 100K / 200 transactions. Question - If I make $100,100, I don't need to worry about paying taxes?
If what you're selling isn't taxable in that state, then you don't need taxes there. This video explains more: th-cam.com/video/DlrTfzKoDQU/w-d-xo.html&pp=gAQBiAQB
Very Nice explanation . I just started retail arbitrage on amazon in Texas but I have no idea that whether should get the sales tax permit from Texas or not ? Can you help me understand this ?
Ecommerce sellers who sell only on their own website would have physical nexus in some places, but it would take time to cross economic thresholds creating sales tax exposure in all states.
Use tax is for inventory and products that were purchased without tax charged that are used or consumed in your business. Use tax is reported generally on the same return as sales tax and you usually report it only to your home state.
This is incredible! For Print On Demand products, does it count as establishing physical nexus if just a single product is printed in another state for one costumer? In regards to marketplaces, I'm particularly interested in Gelato and Printful but on Printful videos, they've said they COLLECT tax but don't remit it.😳 And it sounds like Gelato charges VAT regardless. By the way, your video should be WAY higher in results. The rest are useless and full of misinformation. Thank you!
If you don't OWN the product when it is being printed, then it doesn't count as having a physical presence. I haven't watched Printful's videos, but I suspect they mean that they collect sales tax from you for their own sales tax liability. You'd be responsible for collecting from your customer (after you have nexus and have registered for a permit) since you're the one who has contact with the customer. All Printful does is print and ship. I can't speak about VAT since we only work with US sales tax.
Great information. Where do i find information to see if my recordings and ehandbook are taxable? Also, I didn't see the link for the guide you mentioned.
The guide Kexin was talking about is our 10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business. You can find that here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Great Video. thank you! I live in TX. I will need a sales tax permit for my ecommerce business, but shopify with pay them to the state for me. Correct?
No. Shopify is not a marketplace facilitator, and so will not remit for you. And you have to set up your store to collect, too. I highly recommend you watch our free sales tax masterclass before you do anything else. It will answer this question in more detail for you. ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax?TH-cam&
Thanks. So I’m in automotive repairs and been buying parts from local suppliers providing sales tax ID, to not pay sales tax as a business at the point of purchase, and turn around resell them to customers without collecting taxes. I’m selling the parts at purchase value: do I need to pay the state sales tax of these parts regardless of reaching the threshold or does the threshold apply to my circumstance?
Hi, thank you so much for this video. Just to make sure I understand, my physical Nexus is where my inventory is or from where I am shipping from. Also, if I didn't reach an economic nexus in a year, the transitions or amount doesn't add to the next year? It start counting your transations and amount the next year ? Thank you in advance!
You have physical nexus wherever you have people and/or property. So yes, you have nexus where your inventory is. Nexus thresholds are calculated on a trailing 12-month basis, not necessarily a calendar year. Keep an eye on your sales to see when you start getting close, and then make sure you register after you've hit it in each state.
Great video. Thank you! Our physical nexus is in South Carolina. I think we’re going to go over $100K for 2023 in revenue across all 50 states based on 4th Qtr. projections. However, most of these sales are occurring outside South Carolina. Are we still required to pay Sales tax to the state of SC on all our online transactions even though the point of sale is almost always in another state? Or are we just required to charge sales tax to the small proportion of customers based in South Carolina? Continuing on this vein. Let's say the first state we hit an economic nexus of over 200 transactions is California. Would the state of South Carolina no longer receive the sales tax from the customers in the state and we would then register and remit the sales tax to California instead?
Glad to help. 1) You are only required to collect and remit sales tax for customers in South Carolina until you start passing the nexus thresholds in other states. You can find a complete list of those thresholds at the end of this download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi, thanks for the amazing insights on US sales tax. I have few follow up questions: Does it mean that the seller (who is selling through its own website) is not required to collect and pay sales tax on any product it sells in any other state (if it has not passed the economic nexus threshold)? Will it be fair considering that if the buyer in that state procures the same good from a brick and mortar store will have to pay sales tax?
It is true that until a seller passes the economic nexus threshold, they are not responsible for collecting and remitting sales tax in that state. If regards to the buyer, I don't know if fair comes into it. It's just how the laws are written at this time.
You are amazing!!! I am also a seller on amazon, and I am living in CA. I already had the seller permit, but when I want to buy wholesale from (sam club, Ikea,...) they asked me to show the tax exemption card to not pay the tax to them, could you please let me know how to apply for that card. Because if I don't have that card I have to pay almost 10% for the product I purchase from a wholesale store. thank you.
Since you are already registered with CA, you should also received the exemption certificate from CA. I would contact CDTFA if you haven’t received it.
Economic nexus is determined on a rolling 12 months. Once you cross the threshold and register, you can reevaluate based on whether or not sales go down in that particular state.
Great video. To be clear on "is my product taxable." I sell educational services. 1-1 with me or educational packages I produce. In my state, services sold do not require me to collect sales tax. The questions I have is, if I sell my course to someone out of my state, am I still considered exempt from collection or does the state of purchase determine tax collection or exemption?
Really nice videos. Haven't had anyone explain it so nicely. I have a question...is TikTok also Marketplace? Will they collect in my behalf and send to state ?
Yes, according to this - seller-us.tiktok.com/university/article/agreement?knowledge_id=10013296&identity=1. _" If you sell to buyers based in the U.S., most jurisdictions require that TikTok collects applicable sales taxes on your sales due to marketplace facilitator legislation. For sales to buyers based in marketplace jurisdictions, TikTok will calculate, collect, and remit the sales tax on your behalf. Prices advertised on TikTok Shop are exclusive of applicable sales taxes, which will be calculated and charged at checkout."_
Great video! I do have one question. I just started my business selling through (only) marketplace facilitators a few months ago, but I jumped the gun and registered for a NC sales tax and use # right away. Does this mean I need to file quarterly, even if it's just to say $0 owed? Or will the state realize Etsy, TikTok Shop, etc have collected/remitted for me?
What about if we resell prints to people in the same state than mine? The issue is what city should be collecting for? What about if they pay with credit card or cash?
Sales tax is generally based off the BUYER'S location, not the seller's. The credit card or cash thing shouldn't be an issue either because you still calculate tax according to where they are. This makes it sound like you're selling in person, though. If you are, you need to charge sales tax according the jurisdiction you're in when you make the sale.
You can look it up online for each state. There are 4 main categories for taxability exemptions: services, clothing, SaaS, and food & supplements. Rules are different by state.
This was most in depth video on taxes I’ve watched! In regards to physical nexus, as a print on demand vendor, do printers location that the order get sent to for fulfillment, does this make it a physical nexus to me? Thank you!
Does your company own the printers or are they paying to use them? If you own them then yes, that gives you physical nexus. If you are paying to use them then that does does not create physical nexus.
You have the most straightforward content about this topic. Ty! I have a question about physical nexus. I don't have any employees. I'm the owner of an LLC. I don't have an office or storage. I receive very small volume of items (1 box) that is easily stored on a shelf in my home. Because I am the owner does that establish a physical nexus in that state? Do I have any type of physical nexus at all?
Yes, you do have physical presence/nexus in your own state. For more information on this, check out our sales tax masterclass - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
An affiliate marketer typically gets commission off of the sales they drive. They aren't directly selling the product; the client is selling the product. This makes it a grey area. I would say you don't collect sales tax on the products. What I am not sure about is whether your business is considered a taxable service. Taxable services are different in each state. You'll have to contact the states' departments of revenue directly to get that questions answered. And we don't do anything with VAT, so we can't help you with that.
Thanks so much for posting this video. I've been asking these questions and this is the best explanation I've come across. I'm new to online business. I have one question. If I sell on my personal shopify store and Amazon, don't some states say I have to add up the transactions from both platforms to see if I have Nexus? Also, does print on demand companies make me have physical presence in that state? Thanks again for this video!
Yes you do need to add up both channel’s sales for nexus purposes, but your exposure is only from your Shopify store. And no their physical presence doesn’t affect you :)
Recruitment is difficult because each state has its own definition of what a taxable service is. In the majority of states it wouldn't be taxable, but I would check with the states you are doing business in to be certain.
![14 Biggest Tax Write Offs for Small Businesses! [What the Top 1% Write-Off]](http://i.ytimg.com/vi/5YggWhLeckM/mqdefault.jpg)
I cannot believe this video does not have more views. Incredibly clear in comparison with any online written explanation. And you answered the follow up questions I would have had. Thank you!
I'm so glad you liked it and that it was so helpful for you.
@@LedgerGurus You are very smart! Thank you so much for the information
@@heidipolo5124 You're very welcome
I totally agree.
I have NEVER seen anything like this! You have explained this so clearly! I’m shocked! You made this so achievable to understand! 🎉🎉🎉🎉
Glad it was helpful! Thank you.
you are so comforting! thank you so much! For someone who is trying to do the right thing with taxes before I start it can seem so overwhelming that it almost freezes a person up! You made it so understandable that I feel relief and feel like I can move forward and just get going! It would be awesome if your company handled accounting and tax help for artists and others that sell online and in person at art fairs and flea markets
Sorry! We don't do income tax, but we do offer ecommerce accounting. If you're interested in our services, click here: ledgergurus.com/ecommerce-accounting-services/?TH-cam&
I am an ecommerce startup trying to cover all of the bases. You just covered this one with ease! I had NO idea!!! Thanks a TON!!!
So glad to help. Good luck with your new business!
Thank you so much! You are the only person I’ve found that can explain this clearly. Extremely helpful.
Glad it was helpful!
@@LedgerGurus Hello I want help I want run online print on demand bussniness I live in India but I want run bussniness in usa though printfy and Shopify so I need collect sales tax and any legal issues please reply me I want really help
Guuuurrrrrlllllll!!!!! I was panicking when I did not see sales tax for California!!! This makes so much more sense!!!! 😭😭😭
Glad to help!
I'm subscribing based on the value you provided in this video alone. Fantastic job explaining this topic!
Thank you so much! I hope we can continue to provide value.
Thank you for this video. Watching this one video gets a subscribe from me. I published my first ebook on Google play and nobody there (on their chat) was able to tell me about state sales tax and what I'd have to do. Thankfully, you have made it very clear that I won't have to worry about it since I will be selling my digital products on Google Play only which is a market facilitator.
We're glad we could help!
This video was incredibly helpful! I just started an e-commerce business recently and wasn’t sure about how to charge sales tax (or if I even needed to!) Thank you for answering all of my questions!
Glad it was helpful!
Thank you so much for confirming in a concise and clear manner. My county senior investigator called me and said things which are wrong you just explained the points. I urge everyone to watch this even county does not know their own rules.
Thank you for this and we're so glad to help make things clearer for you.
Thank you for this info just started an online business with a marketplace facilitator and I don’t have any ideas on taxes so I’m having 2nd thoughts but this video inspires me to push through on my business, hoping I can get sales soon.
Good luck!
This is the best video I have found on the subject. Thanks!
Glad it was helpful!
thank you for this, I live in Oregon which does not charge sales tax but i want to ship products to other states. Well under the 200 threshold for sure. good to know i dont need to worry about this for a bit.
Glad it was helpful!
Thank you so much for this information! You covered everything I was looking for!
You are so welcome!
Thank you! Answered all my questions so clearly. 😊
You are so welcome!
This video helped me so much and really put my mind at ease. Such a clear explanation, thank you.
Yay! Glad to hear it.
Thank you so much for explaining this topic so clearly. It is difficult to find that kind of information gave it in that way for free.
You're welcome!
I am so happy I found this! It made it so much easier to understand!
I'm so glad to help. Good luck!
This is super clear! just a follow up question - if one only sells via marketplace facilitator, one only needs to report and remit to home state (i.e. physical presence), right?
No, you still need to know where you have economic nexus, and Amazon FBA may make it so you have physical nexus in other states, as well. You'd only file $0 returns in those states since the marketplace is remitting the tax, but you do have to register where you have physical and economic nexus.
Well that helped some, still have questions though:
-If I live at home and sell art prints (physical product) from home on my online website to buyers that live in my state and other states, do I have a nexus?
For example purposes, let’s say I live in Florida and someone living in New York buys an art print from my personal online website, which I then have to ship to them:
-How would sales tax work here?
-Is the sales tax percentage I collect from them the amount required by Florida (where I live, I ship from) or the sales tax percentage required from New York (where they live, I ship to)?
-Am I remitting the sales tax amount collected to my own state (Florida, where I live and shipped from) or their state (New York, where they live and I shipped to)?
-Does use tax play a role here or not? How?
1) You have nexus in Florida because you have a physical presence there. Physical nexus is created by people and property. Unless you have one of those or you've passed the economic threshold in other states, you don't have nexus there.
2) Until you pass the economic threshold in NY ($500K in gross sales in a calendar year), you do not have nexus there, so you don't charge that customer sales tax.
3) Sales tax is charged and remitted according to where the customers lives, not where you live. So, if the customer is in NY, you'll charge NY sales tax once you have passed the economic threshold there. That sales tax would be remitted to NY, not FL.
4) Use tax is a bit different, and goes by different rules.
Top top video! You explained difficult topic very clearly and easily. Great great job
Much appreciated!
Thank you for this video. I have an MBA and can't understand the information I have read on my state's sales tax site.
Not a surprise. It's legal mumbo-jumbo.
Thank you for our kind explanation! Here's a quick question. If our company already registered in a state as of the beginning of last year but the sales volume in the last year didn't get the economic nexus threshold at the end of the year. Then can we deregister our business in that sate? If so, how to do it?
I definitely suggest you schedule a consultation with one of our sales tax experts for this one: calendly.com/ledgergurus-sales-tax/?
Wow I just started an Ecom store and this tax thought hit me, thanks for your information!
Glad to help!
Excellent explanation, couldn't be more clear, great job!
Glad it was helpful!
Good job and great video. thank you for your support, you answered to my question, Be blessed
You are so welcome
EXCELLENT! Thank you so much for explaining this. Panic, averted.
Glad it was helpful!
Great video. How about how to avoid paying tax on purchases for resail or for POD? Like if purchasing ordering from Printify do I need to fill out an exemption for every state? Or the state I have a Nexus in? Or the states Printify has a Nexus in? Lol
Here's a video that explains what you need to know about sales tax for dropshipping: th-cam.com/video/suUqOj3bhvs/w-d-xo.html&lc=UgwNKf6VFwu8BTZD9VJ4AaABAg
This is one of the best videos on this subject out there. And I've watched a lot 😩
Thank you so much. That means a lot!
AMAZING information and AMAZING way to present them …. Thank you so much 👍👍
Glad you liked it. Thank you.
This was VERY HELPFUL!!! Thank you!😄
You're so welcome!
love this! You did a exceptional job of making a confusing topic clear. Thank you - subscribed!
Glad to help! And thanks for subscribing.
Thank you for such a helpful video! I am just starting my business and will likely not hit those thresholds for economic nexus for a while. However, I have read a bit about notice and report laws and am quite confused! As a non-collecting seller, in some states, are we required to inform our customers that they have to pay use tax? How do we find which states these are?
Yes, you should. We recommend adding a note to your invoices that customers outside your own state may be required to remit use tax since you're not collecting sales tax yet. You will need to register and collect for your own state since you have nexus there.
Thank you very much for your excellent and complete information.
You are welcome. Glad it was helpful!
You answered the question that has been on my mind! Thank you soo much!
You are so welcome!
QUESTION: I sell a digital low-priced e-book online, is that a taxable transaction? I'm also planning to sell a digital course, is that also taxable?
It depends on the state. You'll have to research each state as you approach nexus to see if you're responsible to charge tax there.
Incredibly helpful. Thank you!
You're very welcome!
thank you for very clear explanation.
You are welcome!
I have gone over the $100k threshold but $90k of it was sold to other companies for resale so they are exempt. Does that keep me in the clear? Per your video I do believe so..
Yes, that is typically correct. However, sales tax rules vary by state, so it's important to check the specific regulations in the states where you have nexus.
Thanks for the informative video! Is there a specific website you use to verify if your product is taxable?
We have a whole section on it in our sales tax course (ledgergurus.thinkific.com/courses/sales-tax-roadmap-made-simple) and you can also look it up on Google.
Thank you for the informative video! I’m planning to partner with somebody in China to do a cross border e-commerce business in Oregon and I’m stuck on whether to do a LLC or incorporation to be the most beneficial for the owner. I was told that there’s a business model where the company will make a loss on its projects for the first two years. This would eliminate the 21% federal tax on the corporate level. LLC, when the loss, it will not involve your personal tax, if the profit, it will involve your personal tax need to pay the declaration. When INC makes a profit, the company pays a 21% federal tax. As long as the company doesn't pay dividends it won't affect your personal taxes. Which should I do?
We are not income tax accountants, so we're not the best ones to answer your question.
I've read your guide and watched this but I'm still a little confused... Being based in MN, do I need to ONLY collect sales tax for sales made to other MN customers (assuming I do not reach nexus in other states)? Or collect MN sales tax on ALL orders since I'm based in MN and have to pay in sales tax on everything I sold from my MN base?
Sales tax is based on the state the customer is in. So, you only collect MN sales tax from MN customers.
Great video and detailed explanation LedgerGurus! Your expertise is very helpful, especially with the details around marketplaces collecting and remitting sales taxes to the various states. Quick follow-up question on this. If we are already registered to collect sales taxes for a state and sell there directly as well as with a marketplace (eg, Meta/Facebook). Per your video, I'm assuming we can exclude any transactions done through the marketplace when we file and remit our sales taxes for sales done directly on our website? Just wanted to make sure we didn't leave out the marketplace transactions if they still need to be reported. Thanks much!!!
That is correct.
Hey guys! Short question, If I am a online dropshipper In Indiana with a supplier In China and I have no physical store, warehouse, or employees In Indiana/America, that wouldn't count as physical nexus right? Or would It count just because I live here and run the online shop here? Thank you so much🙏
You have physical presence in Indiana because you live there and are running your store from there.
this is great stuff thank you!
You're very welcome!
Thank you very kindly for covering this material in such a simple, easy to understand manner. This is VERY helpful information and solved a great deal of confusion for me personally.
We're so glad! That's exactly why we spend so much making and publishing this content. :)
Thanks for this video. Gives good clarity. I have one question though. I use virtual address in Wyoming and i sell private label as amazon FBA seller. I know amazon is collecting sales tax on my sales but do i need to report NIL sales tax to Wyoming state ?
yes
Amazing video, I’m still a bit confused
My wife wants to start selling salves and holistic products on her own website. We use our house for physical storage, she’s the only worker and don’t foresee sales passing the economic nexus; should she worry about charging for sales tax
Probably not in other states, though she will need to register in her own state and collect from customers there to remit back to the state.
Thank you for the video, it's so helpful! I got a question, what would happen if I register the sales tax collection before hitting the threshold?
You'll have to start collecting and remitting.
Yes, but the reason I came here is to find out how to actually collect sales tax. If you have to get state and local sales tax licenses prior to being legally able to collect sales tax, but the tax is based on the address of delivery, which is unpredictable in the case of online sales, then what licenses do I need and how do I do it correctly?
You do not need to get a sales tax license for a state until you have nexus there, whether through physical presence or by passing the economic nexus threshold in that state. For instance, if you are based in California, you need to get a California sales tax permit right from the start because you have a physical presence there. But say you have several customers in Utah. You don't need to register for a permit and start collecting sales tax in Utah until after you pass the $100K in sales threshold. You will need to pay attention to your sales channels so you see when you are starting to approach those thresholds. Start with our 10 Steps of Sales Tax guide. It will walk you through all of that, and there is a chart in the back with all of the states and their thresholds. You can find it here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello glad I found you. So I started an ecom business in January and got my first sale in May. I live in Washington DC. I haven't sold much yet and none of my sales have been in DC but I got a letter from the Office of Tax and Revenue saying I'm delinquent in reporting my taxes for quarter 2 ?? what do I need to do?
I would register for a sales and use tax license in D.C, use your first sale date as your effective date, and file $0 on your Q2 return, Q3 possibly as well since that was due last week. Let me know if you have more questions!
Very clear and helpful. Thank you!!
Glad it was helpful!
I have an important question. You said the sales taxes come into play after we reach $100,000 or 200 sales in that state so my question is is it per state? What I am asking is if I get 199 sales in the state of Florida and then 100 sales in Kentucky and 130 sales in New York and thats all I got for my online course that means overall I passed 200 sales but I didn't pass 200 sales in each state so does the sales taxes come into effect per state or overall the states combined sales?
The thresholds are different for every state. You can see a complete and updated list at the end of our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/.
The thresholds are PER STATE. So, even if you have 100 sales in Kentucky and 130 sales in New York, that doesn't affect whether you've passed the threshold in Florida. Now, just so you are aware, there is not a # of transactions threshold in Florida, like there is in a lot of states. You've passed the threshold once you've reached $100K in sales in the state of Florida. This is why I suggest you download that guide and check out the chart at the end.
One more thing, while sales tax is only affected BY STATE, you do need to calculate the sales in EACH STATE from EACH of your CHANNELS to determine if you've passed the threshold. So, if you've sold $75K into Florida on Amazon, and $50K on Shopify, your combined sales are $125K into Florida, meaning you've passed the threshold. Amazon is responsible for collecting and remitting on Amazon, so you don't have to worry about the taxes on that $75K, but you DO need to collect and remit on the $25K you sold on Shopify AFTER you passed the threshold of $100K.
Hopefully this helps.
Thank you so much! Love this. One clarification, if I am selling on a marketplace facilitator, I will still have to register in the states for #1 and #2, correct?
Yes, you still have to register wherever you have nexus.
This is the best video on TH-cam about this. Thank you.
So glad we could help you so much!
Thank you very much for this nice and simple explanation on a subject that had my head spinning as a website startup business
We're happy to help!
Just starting out.. selling online through my own website... are there any states that don't have a threshold where you would have to register immediately? Also, if I choose to sell through etsy as well.. do they collect and remit sales tax for you?
No. Every state that charges state sales tax (all but Alaska, Delaware, Montana, New Hampshire, and Oregon) have economic thresholds. The only states you have to worry about at first are your own state and any other state you have a physical presence in (anywhere else you have people or property). Etsy IS a marketplace and so is subject to marketplace facilitator laws, meaning they will collect and remit for you. For more info on everything you need to know about sales tax, download our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
I am dealing with a company that has CA stores and sells online from their home office in Wisconsin. The on line people calculate the CA sales tax rate accurately but apply it to both the tangible product and shipping and handling charges. When I try to inform them that CA exempts shipping and handling charges from sales tax, they get very huffy and ignore the information.
I don't know what to tell you except to show them the law and see if they'll change it.
Their price, not the law.
Thank you for this video! I have one Q. At the END of the video, I understand you to say that you ONLY need to collect sales tax in a state IF: (a) you have physical nexus there AND (b) you meet economic nexus AND (c) your product IS taxable AND (d) you are NOT using a Marketplace Facilitator. In other words, ALL of those (a, b, c, d) MUST be true for you to be required to collect sales tax. BUT at the 6:00 mark of the video, you say: "When you are first starting to sell . . . only worry about your phyical presence, where you have people, where you have your property. That's where you need to register and start collecting tax ON DAY ONE." So that makes is sound like if ONLY (a) is true, you MUST collect sales tax immediately even if you haven't reached economic nexus. Can you pls clarify that for me? Thanks!
You're close. You only need to collect in a state IF: (a) you have physical nexus there AND/OR (b) you meet economic nexus AND (c) your product IS taxable. If you sell through a marketplace facilitator, they should take care of most of your sales tax, but you'll want to check for home-rule jurisdictions in CO and AL.
very detaied information. thanks
Glad it was helpful!
Question:
time into the video 7min 36 seconds
I live in Pennsylvania. I'm selling T shirts on shopify and T shirts are not taxable. The threshold is 100K / 200 transactions.
Question - If I make $100,100, I don't need to worry about paying taxes?
If what you're selling isn't taxable in that state, then you don't need taxes there. This video explains more: th-cam.com/video/DlrTfzKoDQU/w-d-xo.html&pp=gAQBiAQB
Very Nice explanation . I just started retail arbitrage on amazon in Texas but I have no idea that whether should get the sales tax permit from Texas or not ? Can you help me understand this ?
If you are in the state of Texas, you have physical presence there and need to get a sales tax permit from Texas.
Very helpful! Best explanation on here. Many thanks!
You're very welcome!
Question: how would an e-commerce business ever Not have a state nexus? Thanks for this video
Ecommerce sellers who sell only on their own website would have physical nexus in some places, but it would take time to cross economic thresholds creating sales tax exposure in all states.
@@LedgerGurus thank you for your time
thank you , God bless you!
Thank you.
Can you discuss the use tax and what has to be reported on the sales and use tax form.
Use tax is for inventory and products that were purchased without tax charged that are used or consumed in your business. Use tax is reported generally on the same return as sales tax and you usually report it only to your home state.
Excellent info, thanks a ton for this!
Glad it was helpful!
Thank you for this very helpful information.
Glad it was helpful!
This is incredible! For Print On Demand products, does it count as establishing physical nexus if just a single product is printed in another state for one costumer? In regards to marketplaces, I'm particularly interested in Gelato and Printful but on Printful videos, they've said they COLLECT tax but don't remit it.😳 And it sounds like Gelato charges VAT regardless. By the way, your video should be WAY higher in results. The rest are useless and full of misinformation. Thank you!
If you don't OWN the product when it is being printed, then it doesn't count as having a physical presence. I haven't watched Printful's videos, but I suspect they mean that they collect sales tax from you for their own sales tax liability. You'd be responsible for collecting from your customer (after you have nexus and have registered for a permit) since you're the one who has contact with the customer. All Printful does is print and ship. I can't speak about VAT since we only work with US sales tax.
Great information. Where do i find information to see if my recordings and ehandbook are taxable? Also, I didn't see the link for the guide you mentioned.
The guide Kexin was talking about is our 10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business. You can find that here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
An interesting video, thanks for making it! Does Texas have any unique laws?
Yes! Economic nexus for Texas is $500,000 in the processing four quarters. It requires a franchise tax filed if you have a sales tax permit.
so crisp. 5 stars!
Thank you.
Great Video. thank you! I live in TX. I will need a sales tax permit for my ecommerce business, but shopify with pay them to the state for me. Correct?
No. Shopify is not a marketplace facilitator, and so will not remit for you. And you have to set up your store to collect, too. I highly recommend you watch our free sales tax masterclass before you do anything else. It will answer this question in more detail for you. ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax?TH-cam&
@@LedgerGurus thank you! wiil do!
Thanks.
So I’m in automotive repairs and been buying parts from local suppliers providing sales tax ID, to not pay sales tax as a business at the point of purchase, and turn around resell them to customers without collecting taxes.
I’m selling the parts at purchase value: do I need to pay the state sales tax of these parts regardless of reaching the threshold or does the threshold apply to my circumstance?
If you're selling in your own state, then you do have to collect and remit sales tax from your customers or you need to pay it yourself.
You have nailed every question I had, and for that I am incredibly grateful. Liked and subbed.
Awesome, thank you!
Hi, thank you so much for this video. Just to make sure I understand, my physical Nexus is where my inventory is or from where I am shipping from.
Also, if I didn't reach an economic nexus in a year, the transitions or amount doesn't add to the next year? It start counting your transations and amount the next year ?
Thank you in advance!
You have physical nexus wherever you have people and/or property. So yes, you have nexus where your inventory is.
Nexus thresholds are calculated on a trailing 12-month basis, not necessarily a calendar year. Keep an eye on your sales to see when you start getting close, and then make sure you register after you've hit it in each state.
Thank you very much for this video.
You are very welcome. I'm glad it was helpful.
Thank you for making this video!
Glad it was helpful!
Very well explained!
Glad it was helpful!
Great video. Thank you!
Our physical nexus is in South Carolina. I think we’re going to go over $100K for 2023 in revenue across all 50 states based on 4th Qtr. projections. However, most of these sales are occurring outside South Carolina. Are we still required to pay Sales tax to the state of SC on all our online transactions even though the point of sale is almost always in another state? Or are we just required to charge sales tax to the small proportion of customers based in South Carolina?
Continuing on this vein. Let's say the first state we hit an economic nexus of over 200 transactions is California. Would the state of South Carolina no longer receive the sales tax from the customers in the state and we would then register and remit the sales tax to California instead?
Glad to help.
1) You are only required to collect and remit sales tax for customers in South Carolina until you start passing the nexus thresholds in other states. You can find a complete list of those thresholds at the end of this download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi, thanks for the amazing insights on US sales tax. I have few follow up questions: Does it mean that the seller (who is selling through its own website) is not required to collect and pay sales tax on any product it sells in any other state (if it has not passed the economic nexus threshold)? Will it be fair considering that if the buyer in that state procures the same good from a brick and mortar store will have to pay sales tax?
It is true that until a seller passes the economic nexus threshold, they are not responsible for collecting and remitting sales tax in that state. If regards to the buyer, I don't know if fair comes into it. It's just how the laws are written at this time.
You are amazing!!! I am also a seller on amazon, and I am living in CA. I already had the seller permit, but when I want to buy wholesale from (sam club, Ikea,...) they asked me to show the tax exemption card to not pay the tax to them, could you please let me know how to apply for that card. Because if I don't have that card I have to pay almost 10% for the product I purchase from a wholesale store. thank you.
Since you are already registered with CA, you should also received the exemption certificate from CA. I would contact CDTFA if you haven’t received it.
Awesome explanation!
Question, once i surpass economic nexus, do i have to pay taxes on that state forever or it resets annually?
Economic nexus is determined on a rolling 12 months. Once you cross the threshold and register, you can reevaluate based on whether or not sales go down in that particular state.
Omg the best explanation ever! You are the best
Glad it helped!
Great video. To be clear on "is my product taxable." I sell educational services. 1-1 with me or educational packages I produce. In my state, services sold do not require me to collect sales tax. The questions I have is, if I sell my course to someone out of my state, am I still considered exempt from collection or does the state of purchase determine tax collection or exemption?
The first question is whether you have nexus in the other states. If the answer is yes, then you move on to consider taxability :)
Do you have a video to fill out the Reg 1 in Illinois
We did a whole video dealing with Illinois sales tax here - th-cam.com/video/eROXxrTZPps/w-d-xo.html
Really nice videos. Haven't had anyone explain it so nicely. I have a question...is TikTok also Marketplace? Will they collect in my behalf and send to state ?
Yes, according to this - seller-us.tiktok.com/university/article/agreement?knowledge_id=10013296&identity=1. _" If you sell to buyers based in the U.S., most jurisdictions require that TikTok collects applicable sales taxes on your sales due to marketplace facilitator legislation. For sales to buyers based in marketplace jurisdictions, TikTok will calculate, collect, and remit the sales tax on your behalf. Prices advertised on TikTok Shop are exclusive of applicable sales taxes, which will be calculated and charged at checkout."_
Thank you so much. This is very helpful.
Glad it was helpful!
Great video! I do have one question. I just started my business selling through (only) marketplace facilitators a few months ago, but I jumped the gun and registered for a NC sales tax and use # right away. Does this mean I need to file quarterly, even if it's just to say $0 owed? Or will the state realize Etsy, TikTok Shop, etc have collected/remitted for me?
You will need to file, but you'll state $0 as the amount you need to remit.
Thank you, this info was very helpful!
I'm so glad it helped you!
What about if we resell prints to people in the same state than mine? The issue is what city should be collecting for? What about if they pay with credit card or cash?
Sales tax is generally based off the BUYER'S location, not the seller's. The credit card or cash thing shouldn't be an issue either because you still calculate tax according to where they are. This makes it sound like you're selling in person, though. If you are, you need to charge sales tax according the jurisdiction you're in when you make the sale.
Hi! Thank you for the great explanation 🥰 Could you please advise how to know if my products are taxable? Thank you)
You can look it up online for each state. There are 4 main categories for taxability exemptions: services, clothing, SaaS, and food & supplements. Rules are different by state.
Great info. How does one schedule a call with you?
calendly.com/ledgergurus-sales-tax/
This was most in depth video on taxes I’ve watched! In regards to physical nexus, as a print on demand vendor, do printers location that the order get sent to for fulfillment, does this make it a physical nexus to me? Thank you!
Does your company own the printers or are they paying to use them? If you own them then yes, that gives you physical nexus. If you are paying to use them then that does does not create physical nexus.
You have the most straightforward content about this topic. Ty! I have a question about physical nexus. I don't have any employees. I'm the owner of an LLC. I don't have an office or storage. I receive very small volume of items (1 box) that is easily stored on a shelf in my home. Because I am the owner does that establish a physical nexus in that state? Do I have any type of physical nexus at all?
Yes, you do have physical presence/nexus in your own state. For more information on this, check out our sales tax masterclass - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
Ok ! As a Affiliate marketer do i need to collect sales tax or VAT?
An affiliate marketer typically gets commission off of the sales they drive. They aren't directly selling the product; the client is selling the product. This makes it a grey area. I would say you don't collect sales tax on the products. What I am not sure about is whether your business is considered a taxable service. Taxable services are different in each state. You'll have to contact the states' departments of revenue directly to get that questions answered.
And we don't do anything with VAT, so we can't help you with that.
This may be a dumb question, so if we don’t meet the threshold but have collected tax, what do you do with tax money collected for that state?
You give it back to the customers or you register and remit it to the state.
Thanks so much for posting this video. I've been asking these questions and this is the best explanation I've come across. I'm new to online business. I have one question. If I sell on my personal shopify store and Amazon, don't some states say I have to add up the transactions from both platforms to see if I have Nexus? Also, does print on demand companies make me have physical presence in that state? Thanks again for this video!
Yes you do need to add up both channel’s sales for nexus purposes, but your exposure is only from your Shopify store. And no their physical presence doesn’t affect you :)
Excellent information.
Glad it was helpful!
Is recruitment (100% done online) subject to sales tax?
Recruitment is difficult because each state has its own definition of what a taxable service is. In the majority of states it wouldn't be taxable, but I would check with the states you are doing business in to be certain.