To avoid crippling penalties and interest, e-commerce businesses selling in the USA must understand and comply with complex sales tax regulations. This episode provides essential guidance for both marketplace and independent website sellers, explaining nexus, EIN requirements, and strategies to minimize tax burden and risk.
Key takeaways
Don't automatically register for sales tax in all states; perform a nexus assessment to identify where you have a physical or economic presence requiring registration to avoid unnecessary filing and costs.
If selling on your own Shopify store in addition to Amazon FBA, you must charge and collect sales tax in all states where your FBA inventory creates nexus, as Shopify doesn't automatically handle this like marketplaces do.
If you collect sales tax from customers, you are legally obligated to remit it to the states. Failing to do so can result in severe penalties, including criminal charges, even if unintentional.
For overseas sellers, obtain an EIN (Employee Identification Number) from the IRS. Be aware that this can be a lengthy process if you don't have a US Social Security Number, potentially taking months.
Leverage Shopify's built-in tax features, which can track economic nexus thresholds and prompt you when you need to register in new states, streamlining compliance on your platform.
In this episode, we'll explore the intricacies of U.S. sales tax with Jared Smithson from RJM Tax Exemption. We'll cover everything from the basics of what it is and how it works to the specific challenges businesses face in staying compliant across different states. We’ll also explore how exemptions work, the importance of proper documentation, and the steps you can take to avoid costly penalties.
Whether you're a business owner, accountant, or just someone who wants to understand sales tax better, this conversation with Jared is packed with valuable insights that you won't want to miss. Topics we cover: - What is US sales tax? - What are the US tax rules for overseas ecommerce sellers? - How do rules differ by state? - How do you pay taxes, and how do the rules differ by platform? - How do you minimise your tax burden? - What issues do sellers get into? Have you got any horror
stories?
What does this episode say about finance & fundraising?
Don't automatically register for sales tax in all states; perform a nexus assessment to identify where you have a physical or economic presence requiring registration to avoid unnecessary filing and costs.
What does this episode say about shopify & ecommerce platforms?
If selling on your own Shopify store in addition to Amazon FBA, you must charge and collect sales tax in all states where your FBA inventory creates nexus, as Shopify doesn't automatically handle this like marketplaces do.
What does this episode say about supply chain & operations?
If you collect sales tax from customers, you are legally obligated to remit it to the states. Failing to do so can result in severe penalties, including criminal charges, even if unintentional.
What does this episode say about finance & fundraising?
For overseas sellers, obtain an EIN (Employee Identification Number) from the IRS. Be aware that this can be a lengthy process if you don't have a US Social Security Number, potentially taking months.
What does this episode say about finance & fundraising?
Leverage Shopify's built-in tax features, which can track economic nexus thresholds and prompt you when you need to register in new states, streamlining compliance on your platform.
