How to prep your business for Small Business Saturday
Small Business Saturday is the local antidote to the nationwide shopping frenzy of Black Friday. It’s a day when many small businesses offer special deals and incentives to bring customers into their stores, both brick and mortar and virtual.
One step in preparing your business for a big rush on Small Business Saturday is to have your financials in order. An important part of your business financials — especially if you do some or all of your sales online — is the challenging world of sales tax. New to sales tax? Start with our publication, Sales Tax Essentials for Small Business.
Here are a few tips to help you prep for success on Small Business Saturday:
Announce yourself (and your deals)
The best way to take advantage of Small Business Saturday is to make sure your customers know you’re participating and what you have to offer. Especially if you’re selling online, invest time and money to be certain your participation in the holiday is known – via social media, advertising platforms, or by having your friends and family promote your business online.
Consider offering deals to your customers. That could take the shape of a loyalty program or a surprise discount during checkout. Black Friday doesn’t need to be the only time where stores offer perks to incentivize shopping.
Know your economic nexus
Ecommerce sellers entered a brave new world of sales tax compliance on June 21, 2018, with the Supreme Court’s decision in South Dakota v. Wayfair, Inc. Prior to Wayfair, physical presence in a state was a requisite for collecting and remitting sales tax. But now, your “economic and virtual contacts” with a state can trigger a sales tax collection obligation in states with “economic nexus” policies. This means your obligation to collect and remit in a state is tied to gross sales revenue or transaction volume. Most economic nexus states are sticking close to the thresholds referenced in South Dakota v. Wayfair, Inc.: $100,000 in revenue or 200 or more separate transactions delivered into the state.
Sound complicated? It is — but there are resources to help you understand and get a handle on your sales tax compliance obligations. Don’t delay!
Know your rates
Once you’re clear on where you have economic nexus, be sure you understand the sales tax rates you need to charge for each of those states and ensure your shopping cart is programmed correctly. Some states, such as New York, set sales tax rates based on the customer’s address, so you’ll need to add the appropriate amount of local tax on Small Business Saturday.
Other states, such as Pennsylvania, have origin-based sales tax, so you’ll probably add the same rate for all orders in those states. If you understand your tax liabilities ahead of time, you can charge your customers the correct amounts and avoid dipping into your profits to pay your sales taxes when it’s time to file your returns.
Special holiday taxes for Small Business Saturday
In the world of sales taxes, the maxim that no good deed goes unpunished often applies. Are you offering gift wrapping? That’s taxable in Nebraska. A special free gift for your customers on Small Business Saturday? You’ll have to tax that too, unless you’re in Florida. Do you add sales tax to the cost of shipping? That depends on where you ship.
The moral of the story: If you want to do something nice for your customers, it’s always best to understand the sales tax ramifications first.
The bottom line
Overall, Small Business Saturday is a holiday that should be celebrated. In a world that can seem dominated by large retailers, this Saturday is for giving small businesses the recognition they deserve. Amid the celebration and the fun, we hope you’re prepping responsibly to ensure maximum traffic and compliance while enjoying the holiday season.
Looking for small business sales tax help?
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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