As more and more people turn to online shopping, there are things that a business owner must understand about online taxation. Selling across state lines will also require business owners to adhere to certain rules and follow certain protocols.

What Do I Need to Know About Doing E-Commerce Across State Lines?

When you are doing e-commerce across state lines, the following rules apply and need to be kept in mind:

  • E-Commerce businesses are required to pay taxes on their sales.
  • Each state has its own rules on what taxes businesses need to be paid (e-commerce deals must adhere to these rules).
  • E-commerce sellers should contact experts to help them consider technologies to use and to determine what tax rates to use.

Staying on top of all of the tax regulation and rule changes across state lines can be one of the most challenging parts of doing e-commerce business. There were 619 e-commerce law changes in 28 states in 2019. Keeping up with all of those changes is enough to give even the most e-commerce savvy experts a challenge.


What is a Sales Nexus in E-Commerce Business?

A Sales Nexus is the law that determines an e-commerce business’s relationship with the taxing jurisdiction. Brick-and-mortar stores have an easier time determining their sales nexus, but for e-commerce businesses, this is much more challenging.

The laws in each state are different and the sales tax nexus can change from state to state. If you are mailing small amounts of product, the sales tax nexus may not matter much, but when you are shipping $100,000s worth of merchandise into different states, you need to be aware of the sales tax nexus in that state in order to stay in good standing with the tax laws in place in that state.

Use a Point of Sales (POS) System That Tracks Your Sales Taxes:

If you sell products to many different states, then it is wise for you to use a Point of Sale (POS) System that tracks your sales taxes that are due based on the state you are selling your goods in. Allowing technology and software to help you track the taxes you owe in the places where you do your e-commerce business.

Tips to Help You Manage your E-Commerce Taxes:

The following are some tips to help you keep track of the e-commerce sales that you are doing and how much you will owe at the end of each year to each place where you do business:

  • Track every penny of your sales so that a business-wide CPA can handle and crunch your numbers easily to determine the taxes that you owe.
  • Track the payment deadlines in each state where you do e-commerce business to ensure that you pay on time and don’t incur more financial penalties
  • Know how to remit your taxes whether you need to write a check or make a direct payment to each state to cover your taxes.
  • Ensure that you have the proper permits to do business in each state so that you don’t lose your ability to do business in different jurisdictions to avoid additional fines or penalties.
  • Consult an expert for any additional assistance you may need when completing your taxes.

Ensuring that you pay the taxes that you owe to each state that you do e-commerce business in keeps your business in good standing and helps you avoid penalties and fines that can reduce your profits.

For more information on how to ensure that your e-commerce brand is up to par on all of your taxes in each state you do business in, please contact us. We are always here to help.