Editor’s note: This is a guest post by Mark Faggiano, founder and CEO of TaxJar
At TaxJar, we call January the “Sales Tax Perfect Storm” because nearly every online seller has a sales tax filing due, and many have more than one due. It can be a huge headache, especially if you haven’t dealt with sales tax since last January.
But this month is also a great time to make sure your sales tax life is on the right track.
Follow the steps on this list to ensure that you are sales tax compliant now, and in all the years to come:
- Double Check Where You Have Nexus – Nexus is just a fancy way of saying “significant presence” in a state. You always have nexus in your home state, but you may also establish nexus through other business activities like having an office, store, or storing inventory in a warehouse (this applies to FBA sellers.) especially if you have nexus in a state you should charge sales tax to buyers in that state. You can find out a lot more about sales tax nexus here.
- Register for your Sales Tax Permits – If you have nexus in a state, you should register for a sales tax permit in that state before you begin collecting. (Don’t skip this step! Many states consider it unlawful to collect without a permit.) You can find step-by-step guides to registering for a sales tax permit in each state here.
- Cancel Sales Tax Registrations When You Can – On the other hand, maybe you’ve evaluated your nexus and you no longer have sales tax nexus in a state. If that’s the case, contact that state’s department of revenue to cancel your sales tax permit. This saves you from having to collect sales tax and file sales tax returns from customers in that state.
- Review (and Potentially Change) your Filing Frequency – When you first sign up for a sales tax permit in a state, the state assigns you a filing frequency – usually monthly, quarterly or annually. Sometimes states will send you a notice changing this frequency. Other times, you can contact the state and ask them to change your filing frequency. This usually works best in states where you collect very little sales tax from buyers.
- Make sure You’re Collecting on All Channels – Multi-channel sellers need to be on guard about collecting sales tax in the right states on all channels. If you have nexus in a new state, be sure you’ve started collecting from buyers in that state on all the channels on which you sell. The same thing goes for if you no longer have nexus in a state. Be sure you’ve stopped collecting sales tax from buyers in that state on all the channels on which you sell.
And that’s it! You’re sale tax compliant for 2016. If you have any more questions about sales tax, check out our in-depth, free Sales Tax Guide for FBA Sellers. Or start the conversation in the comments!
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!