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Sales taxes for the remote entrepreneur

  • May 22, 2017 | Laura McCamy

Ecommerce opens a world of possibilities for the business owner with wanderlust. You can mind the shop from anywhere with a cell signal: a beach in the Bahamas, a café in Cologne, the top of the London Eye. You can be a remote entrepreneur from almost anywhere in the world.

If your office is an internet café in Shanghai one week and a hotel in Singapore the next, do you still need to charge your customers U.S. sales taxes? To answer this question, let’s look at the hypothetical case of Frida, the remote entrepreneur.

The charmed life of the remote entrepreneur

Frida had the travel bug from an early age. After college, she hopped on an airplane whenever she could -- which wasn’t often enough.

Then, Frida visited Bali and fell in love with batik. She bought some colorful decorated sarongs and sold them on eBay. Her next trip was to Thailand, where she discovered amazing Thai silk. She ordered silk scarves in every color and added her own online store, Frida’s Finds, to supplement her eBay sales.

Frida soon realized that her love of travel was good for her business. She sublet her apartment in New York, had her mail forwarded to a post office box, and became a remote entrepreneur.

Frida shipped her treasures to a fulfillment warehouse in Nevada, which filled orders for her and accepted returns. She kept her store up to date from her laptop and handled customer inquiries on her cell phone. She was living her dream life, free to roam wherever her curiosity took her.

Nexus and the remote entrepreneur

Frida is still an American citizen with a business address at her New York mailbox. When she ships an order to a customer who lives in New York state, she has to charge them New York sales tax. The same thing applies in Nevada, where her inventory in the fulfillment center gives her nexus in that state.

In addition, Frida has entered into an affiliate marketing agreement with the Travel Bug Blog. The blog’s many fans dream of travel more than they actually get out into the world, but they can own a little piece of Frida’s travels through Frida’s Finds. The partnership turns into a big success and soon Frida is shipping Kente cloth shirts made in Ghana and Aran knits from Ireland to the blog’s readers in places like Illinois and Idaho.

The blog is written by Sarah, who loves to write about travel while she stays happily home in Saint Cloud, Minnesota. Frida’s sales through Sarah’s St. Cloud-based blog have given her click-through nexus in Minnesota. She must register to collect and pay Minnesota sales taxes. Fortunately, she can do this online from Bombay.

Though Frida spends most of her time abroad, she still needs to collect and remit sales taxes in New York, Nevada and Minnesota.

The moral of the story: Wherever you go, there are always sales taxes.

Frida doesn’t mind: she uses sales tax automation software to make filing a breeze. It gives her more time to shop at the bazaars of Marrakesh and the markets of Istanbul.

Happy trails!

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Laura McCamy
Avalara Author Laura McCamy