Sales Tax Consulting For Online Business
Nowadays, with the evolvement of internet marketing, online businesses are growing rapidly as it provides great convenience and affordability to customers. Most of the online retailers and ecommerce shopping cart stores do not have much knowledge about sales taxes and they think there is no sales tax on online selling over the internet. But the reality is totally different. Online sales are treated same as the bricks-and-mortar sales (buy from local stores) and the sales are taxable. If online retailers do not collect sales tax from customers, customers are responsible for remitting the Use tax on online purchases directly to their state.
If an online seller has physical presence in the states such as a store, warehouse, business offices, or sales representative soliciting sales, the seller must collect Use tax from their customers on these online internet sales. This physical presence is known as "Nexus." If an online seller does not have nexus in a state, they are not required to collect tax there. But every state has laws defining the "engagement of business in the state" to determine whether a business has nexus. These laws differ from state to state, and many on-line ecommerce retailers find themselves liable to pay overdue sales tax with huge penalties in certain states.
The goal of imposing sales and use taxes is to create a level playing field for both in-state and out-of-state retailers. Sales & use taxes are consumption tax and collected from consumers. Sales tax is collected upon the retail sale of tangible personal property or certain services at the point of sale by a store retailer. Use tax is due upon the storage, use or consumption of tangible personal property or of certain services when sales tax was not paid. Use tax is also a complementary tax on purchases made from out-of-state retailers without charging the sales tax.
Now, you should be able to understand how complex the rules and regulations of sales & use taxes are. It's always recommended that online businesses consult with sales & use tax consultant such as StatesSalesTax to review whether they are obligated to collect tax on their online sales. Unlike income tax where businesses pay tax on net income, there is no income tax liability if a business does not make a net profit. Sales tax is due on the selling price even if a business sells the merchandise at a loss. The sale tax rates range from 6% to 10.5% depending on the state where the shipment of the merchandise is delivered. The profit for the business is eroded by such applicable tax rate.
A sales & use tax consultant like StatesSalesTax, run by former state sales tax auditors, has made an excellent reputation to provide quality and personal services in giving tax advice to their clientele base and has been consistently availing their services to help businesses understand the importance of sales tax compliance, nexus, and other issues.
If an online seller has physical presence in the states such as a store, warehouse, business offices, or sales representative soliciting sales, the seller must collect Use tax from their customers on these online internet sales. This physical presence is known as "Nexus." If an online seller does not have nexus in a state, they are not required to collect tax there. But every state has laws defining the "engagement of business in the state" to determine whether a business has nexus. These laws differ from state to state, and many on-line ecommerce retailers find themselves liable to pay overdue sales tax with huge penalties in certain states.
The goal of imposing sales and use taxes is to create a level playing field for both in-state and out-of-state retailers. Sales & use taxes are consumption tax and collected from consumers. Sales tax is collected upon the retail sale of tangible personal property or certain services at the point of sale by a store retailer. Use tax is due upon the storage, use or consumption of tangible personal property or of certain services when sales tax was not paid. Use tax is also a complementary tax on purchases made from out-of-state retailers without charging the sales tax.
Now, you should be able to understand how complex the rules and regulations of sales & use taxes are. It's always recommended that online businesses consult with sales & use tax consultant such as StatesSalesTax to review whether they are obligated to collect tax on their online sales. Unlike income tax where businesses pay tax on net income, there is no income tax liability if a business does not make a net profit. Sales tax is due on the selling price even if a business sells the merchandise at a loss. The sale tax rates range from 6% to 10.5% depending on the state where the shipment of the merchandise is delivered. The profit for the business is eroded by such applicable tax rate.
A sales & use tax consultant like StatesSalesTax, run by former state sales tax auditors, has made an excellent reputation to provide quality and personal services in giving tax advice to their clientele base and has been consistently availing their services to help businesses understand the importance of sales tax compliance, nexus, and other issues.
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