Which Ecommerce Sites Help You Collect Online Sales Tax?
- Apr 6, 2016 | Gene Marks
For many online sellers, figuring out sales taxes is heavy talk.
But here's the thing: Selling on the internet is as much a business as managing a brick-and-mortar retail store. And like in traditional retails, sales taxes a fact of life for online sellers.
It all begins by determining where you have nexus. This is a crucial step that will identify where you should collect sales taxes. You also must make sure to know which of your items are taxable in those states.
After you've pinned down where you have nexus and the rules that surround exemptions, the next step is setting up collection.
Don’t worry, though. You don’t have to manually collect sales taxes from each customer.
Most ecommerce platforms help you collect sales taxes. Most of them also have built-in calculation functions. Some platforms like LemonStand and WooCommerce are integrated with sales tax calculation software like AvaTax that make things even easier for sellers.
Here are details on ecommerce sites that help you collect sales taxes.
To automate sales tax collection on Amazon, you need to upgrade your Individual Seller account to the Professional seller account. Once that’s done, Amazon will send you some recommended reading to keep you on top of your tax game.
Now, to automate collection, Amazon will ask you to choose your product tax codes from its master list, states where you will collect sales tax, and your state registration number from your sales tax license number in each state.
Next Amazon will ask if you want to input the tax rates or use Amazon’s calculation engine. You can also configure taxes on shipping & handling and gift-wrapping based on the taxability of items used.
Once that’s done, sales taxes are automatically collected from your sales.
The eBay tax table allows you to compute sales taxes based on your nexus status.
After setting up the tax table, you can choose to let eBay collect sales taxes for you. The rates on the tax table are used to determine sales taxes to be charged depending on the location of the buyer. The taxes are then included in the final price at checkout.
While Etsy requires sellers to determine their tax rates, the platform helps out by automating sales tax collection. Once you manually input tax your rates, the site collects sales taxes on all your transactions where applicable. Use tools like TaxRates.com to determine sales tax rates you should be following.
Setting up automated sales tax collection on Shopify is quick and easy. Go to Settings > Taxes on your Shopify profile. There you’ll have the option to include taxes in your listed prices. While Shopify regularly updates tax rates, they still encourage sellers to determine applicable rates based on their unique situations.
From there, you can choose Automatic under Tax Calculation. It will show a dropdown menu where you choose the states from which you’re required to collect sales taxes. Once that’s done, applicable sales taxes are added to the total prices of your products.
No matter which ecommerce site you use, it's important to be up-to-date on the tax rules governing your business in the states where you sell. Use automation to your advantage, but don't let it replace informed vigilance.