USA Ecommerce and taxes

Feb 13, 2023
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United States
Hello! I have asked different CPA and got multiple answers so I'm looking for the correct one :). I have an ecommerce business located in FL. I do dropship from my vendors and I'm looking to start to store and sell my own inventory using a third party fulfillment center that is located in FL. I would like also to use Amazon FBA but it is more complicated because it also depends where the stock is located, right? Right now I have been selling on eBay and Amazon and they collect taxes for me but I would also like to start sell in my own website so I'm looking for an advise how to do it. Does the current taxes that eBay & Amazon are collecting in my behalf counts against the different threshold states requirements? Thank you!
Sep 7, 2023
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Navigating sales tax for an e-commerce business can indeed be complex, and it's essential to ensure compliance. Here are some key points to consider:
  1. Third-Party Fulfillment Center:
    • Using a third-party fulfillment center located in Florida can create sales tax obligations in Florida because your inventory is physically present there. You'll typically need to collect and remit sales tax on sales to customers within Florida.
  2. Amazon FBA:
    • Amazon FBA complicates matters because inventory can be stored in various states. This creates sales tax obligations in those states. You'll need to monitor where your inventory is stored and comply with the sales tax laws of each state.
  3. Nexus and Thresholds:
    • Each state has its own rules about what creates "nexus," which is a connection that triggers sales tax obligations. Inventory storage, economic activity, or reaching specific sales thresholds can create nexus. Be aware of state-specific rules regarding thresholds that may apply to your sales.
  4. eBay and Amazon Taxes:
    • Taxes collected by eBay and Amazon on your behalf typically cover the sales made on their platforms. These taxes do not necessarily count toward your obligations in other states or for sales on your own website.
  5. Own Website Sales:
    • When you start selling on your own website, you'll need to collect and remit sales tax based on the rules of each state where you have nexus. You might consider using sales tax automation software to help manage and calculate the correct sales tax for each transaction.
  6. State-by-State Compliance:
    • To ensure compliance, research and understand the sales tax laws in each state where you have nexus. It's often helpful to consult with a tax professional or CPA experienced in e-commerce taxation to navigate these complexities.
  7. Registration and Reporting:
    • Once you determine your sales tax obligations, you'll need to register with the respective state taxing authorities, collect sales tax from customers, and file regular sales tax returns.
Remember that sales tax laws are subject to change, and it's essential to stay up to date with any new regulations or requirements. Seeking professional advice is often a wise choice to ensure you meet your tax obligations accurately and avoid potential issues.

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