Sales Tax Compliance Tips Before Your Holiday Sales Skyrocket!
As an Amazon FBA seller, it is your responsibility to collect and remit sales tax in the states you have nexus (stock). In order to collect sales tax as well as be in sales tax compliance, you must first have a sales tax permit (or license) in each state where you have nexus.
If you are selling a product that is responsive to holiday sales (where you may experience a 3x – 5x growth in sales, now is the time to evaluate your sales growth to determine if you should apply for sales tax permits now vs after the holiday season is over. Remember, every day that goes by that you are not collecting and remitting sales tax when you have nexus, you will be paying sales tax, penalties, interest, and fees for past returns out of your own pocket.
Here are the steps and our services to help you evaluate these critical steps and decisions to best manage your cash and compliance requirements.
● Determine your estimated gross sales from November – January (this will help determine which states to apply for sales tax permits before and after this time period).
● Join Sales Tax System for $597 and, as a member, you will have the tools to do the following:
○ Closely monitor sales in the other states and balance the time frame to apply; some we have to mail in the application with a SSN (which may take 8 weeks) vs applying online in several states.
○ After applying for sales tax permits, some states require a tax account (username and password) to be set up in order to remit sales tax. We provide those steps for you.
○ Population Calculator per state to help determine what percentage to use to estimate sales in each state, to help estimate sales tax due. California for example is about 13.5% of the total US population.
○ Sales Tax Calculator. Use this tool to help determine what you may owe in sales tax + penalties + interest as you start to sell in each state. This will help you evaluate in which state you may want to apply for permits up front or wait until after, based upon the cost to register and cost of sales tax out of your own pocket.
○ Apply for Sales Tax permits. Typically, a new seller will wait as your stock goes to a few Amazon.com FBA warehouses and travels around and determine when to apply for permits, which will trigger sales tax compliance.
○ Because of this time of the year, with the holiday sales around the corner, odds are your sales will jump dramatically and you will want to apply for some permits even before stock shows up in those states. We would apply for sales tax permits with a November 1st start date and you would update Amazon Seller Central with your permits to start collecting.
○ You may decide to register for all the FBA states at one time, which currently is 25. That would be 25 x 75 or $1875 plus $302 in state fees. Tennessee is one you may have to wait because you have to be over $4800 in sales before you may remit. Other states are coming onboard soon also.
○ Or register with the most popular states first; those would include:
■ New Jersey
● Colorado requires foreign qualification up front when we apply for a permit, and now requires 3 permits for one state. All other states only require one permit. This may be a state you wait to apply.
● Other states have additional steps including to foreign register, and we cover that in Sales Tax System. California is one of them and also requires the $800 franchise tax fee.
● As we apply for permits in late September, they will come in over the next 1-6 weeks and you will update your Amazon Seller Central Account. We have a cheat sheet for you to update your tax settings.
● Remitting Sales Tax will come into play either on a quarterly or monthly basis in most states. We will recommend our preferred vendor for remitting sales tax and when it makes sense to register to be prepared to remit by December for the month of November. Most states you may be on a monthly basis; some you may have to remit quarterly (that is covered also by Sales Tax System).
● Are you based outside the U.S.? As a foreign seller, you will have about $1,200 per sales tax filing period (for about 15 states) when you have a US Bank Account. It is required for MOST U.S. remitting companies to automatically remit sales tax to the US via an ACH. This would require travel to the US. NY and Las Vegas are an option. Our fee for our bank account overview, resources and process are $497.00. Here is the PDF overview: nvinc.com/pdf/usbanking.pdf. Once you sign up, you will get immediate access to a campaign with our bank contacts in each state. NY will require one state to foreign qualify. Ideally, you make this trip in November, so the account is in place in and ready to remit by December/January.
Here is how we help you move forward:
Learn more about and join Sales Tax System with all the support that we covered: http://budurl.com/stsmembership
After you join Sales Tax System, you will be added as a new member within 24 hours and your login details will be emailed to you. You will have access to our membership training and our $75 per state sales tax permit service. If you do not have a SSN, it will take longer to apply for sales tax permits in many states (up to 8 weeks).
$497 for our US Bank Account Service. After you order, you will be sent the details on the next steps and banks in the process: http://nvinc.com/pdf/usbanking.pdf
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