Sellers must include sales tax in their pricing.
Shipping & Sales Tax is included in the sale price. Each store owner/artist is responsible for fulfilling orders and shipping. Sellers receive 100% of sale proceeds and are responsible for paying any sales tax that applies – using Nexus tax rules.
Nexus, also known as sufficient physical presence, is the determining factor of whether an out-of-state business selling products into a state is liable for collecting sales or use tax on sales into the state. Nexus is required before a taxing jurisdiction can impose its taxes on an entity. more about Nexus
Forty-five U.S. states and D.C. levy a sales tax. Merchants in these states are required to charge sales tax to buyers.
Sales tax is considered a “pass-through” tax, because the merchant is only holding the taxes collected before remitting it to state and local taxing authorities at a set time (usually either monthly, quarterly or annually.)
In the U.S., states have quite a bit of leeway with sales tax administration. Because of this, all 45 states (plus D.C.) that levy a sales tax have different rules and laws when it comes to sales tax. Sales tax rates can vary by state and locality, too. It’s important to get in touch with your state’s taxing authority or an experienced accounting professional should you have questions about sales tax.
Determining Sales Tax Nexus
Online sellers must collect sales tax in states or localities where they have “sales tax nexus.”
While all states have a slightly different definition of this term, sales tax nexus is generally defined as “presence” in a state. This presence must be significant enough so that a business has to comply with the state’s sales tax law, presence can include – but is not limited to – an office, an employee or a warehouse.
If you have sales tax nexus in a state that requires sales tax collection, then you’re required to collect sales tax from all buyers in that state.
If you do not have sales tax nexus in a state, then you’re not required to collect sales tax when you sell online to buyers in that state.
- Determine where you have sales tax nexus.
- Register for a sales tax permit in the state where you have nexus.
- Set up your channels to collect the correct amount of sales tax from buyers.
- Periodically file sales tax for each state where you have sales tax nexus.
Remitting Sales Tax to Nexus States
A state’s taxing authority is generally called the “[State] Department of Revenue” though it can go by other names.
When you apply for your sales tax permit with your state’s taxing authority, they will assign you a frequency at which to file and remit sales tax. This is generally monthly, quarterly or annually, and often depends on your sales volume or the volume of sales tax you collect.
We at WMG are still looking for an effective way to collect sales tax and pass it along to your account. Because you only need to collect from buyers from your same state that you subtract sales taxed owed from the purchase price if you sell within your state. In essence you are including the sales tax (giving that special credit of whatever the percentage is in your particular case.
You can also ask they purchase directly from you to avoid shipping and PayPal fee of 2.87%. Using your store as a gallery to show your work.
Remember – you only need to worry about sales tax if sold within your state, not the remaining 49. And if you’re fortunate enough to operate within 5 states that don’t require NEXUS – you have no worries.