We are a California based e-commerce business, but I noticed there is no sales tax when a customer from another state purchases our product, for example Arizona.
I was reading about how if I do not have a "nexus" in that state I do not have to collect sales tax but wouldn't the state of CA charge me tax on total revenue? Not just goods sold in the state?
Does anyone have information on when to charge sales tax and how much?
I was thinking about creating my own sales tax and charging whatever the respective state's sales tax is, but I do not know if this is the right thing to do.
Thank you in advance!
Hi there, @medabloom 👋 Thanks for taking the time to reach out to us here on the Seller Community! Good to hear from you again. We appreciate you giving us some context to your question - its a good one.
Hopefully some peers can jump in here and provide some advice or insight on their own experience setting up out-of-state sales tax for Online Orders - we will leave your post up here in hopes to generate some dialogue.
From a Square perspective, with this one we would recommend you reach out to a Tax Professional - they would be able to insure you have your ducks in a row come tax time, and can also provide some advice on how to approach this from a reporting stand-point as well.
I will keep an eye on this thread! Feel free to reach out if anything comes up.
I'm not an accountant or tax professional, but I do run my own business and submit sales tax. Sales tax is what is known as a "pass through" tax, as in, you collect it, but it is not considered revenue because you have to "pass" or remit it to your local government tax authority.
For example, I sell puzzles online. If I sell one to someone in New York, I don't collect sales tax. If I sell one to someone where I do business, my nexus, Georgia, then I collect not only the state sales tax, but also their county and sometimes city sales tax. Because I don't collect a lot of sales tax, I only file it once a month. I go to the the Georgia Department of Revenue, where I got my sales tax license, and I file total sales sourced to Georgia, what sales tax I collected, and taxable sales divvied up by location of Georgia purchases.
With that said, California taxes are a beast, and talking to a professional is probably the only way you will get a clear answer. I speak from personal experience of dealing with the California Franchise Tax Board.
There is also legislation being passed that has to do with e-sales collecting and remitting sales tax for every state, so that is something to be aware of in the future.
I only sell online or at festivals. There is no storefront. How do I setup for taxes from people buying in other cities/states?
Hello hello @riachaneyl! Thanks for your question. Festival season is upon us! ✨
I've moved your question to this thread so you can see how @3catmax handles this same situation. Feel free to tag them and ask any additional questions you may have.
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