International tax laws can be complicated for all Amazon FBA and Shopify sellers. Several rules and regulations also affect the way business owners conduct their businesses. All business owners who sell have to deal with sales tax. The District of Columbia and 45 states across the US require sellers to charge sales tax to buyers. But all Amazon FBA and Shopify sellers are required to charge sales tax in the states where they have a sales tax nexus. Basically, this means that sellers have to charge sales tax in any state where they have a significant presence.
Each state describes nexus in a different manner. Sellers generally have a nexus if they possess a warehouse or a physical office in a state. Amazon FBA and Shopify sellers also create a nexus by hiring an employee in the state or in case they represent their business in a fair or trade show. The state uses sales tax to pay for public services schools and roads. Therefore, it is important for all Amazon FBA and Shopify sellers to know everything about nexus and what constitutes it.
For instance, if you run an online business in Georgia and you decide to hire a relative in Alabama and store your products in Mississippi, you have a nexus in all those three states owing to various business activities. To initiate the sales tax process, Amazon FBA and Shopify sellers must first estimate where they have a nexus. They need to state where their goods are stored and where their employees work. You can begin by finding out your physical presence in a state and contacting the Department of Revenue to confirm.
Remember that all sellers have to pay for a sales tax permit in a few states. They will also have to renew the permit regularly. It is important that you get all important and relevant information regarding the same with the state department of revenue. Bear in mind that you have to register. If you don’t have a permit yet, it may be illegal for you to collect sales tax. Once you have successfully registered for your sales tax permit, you will be given the dates for when you will have to file, by the state. This can be a quarterly, annually or even a monthly date.
If online sellers have a nexus in more than one state, they could file monthly in one and quarterly in another. Since sales tax generally varies in different states, the frequency of your sales tax filing is usually connected to your gross sales. Naturally, the more you sell, the more often you will be required to remit sales tax.
Moreover, if you have nexus in more than one state and you are selling on multiple channels, you will be required to collect on all the platforms in all the states. This means if you sell on Shopify and Amazon, you will have to collect on both of these channels for your states. This holds true for a seller who only stores goods in a state because of the Amazon connection.
