Quick Guide to Paying Sales Taxes on your Addoway Sales

As part of Addoway's ongoing partnership with SaleHoo, their blog writer, Alice Delore, has agreed to share some of her tips on paying sales taxes on your Addoway sales.

Do you need to pay tax when you make sales online? What’s a tax ID? If you have ever pondered these questions, you are not alone!

Plenty of online retailers are unsure about their tax obligations, so in this post, I’m going to demystify some of the hearsay and present the facts about sales tax so you can stay on the good side of Uncle Sam!

Your tax obligations when you sell online

In the US, when you sell items with the intention of making money, you must pay tax. You are technically also supposed to pay tax when you sell your own second hand items and make a profit by doing so (for example, selling a DVD for more than what you paid for it).

All US sellers are obliged to pay sales tax unless you live in one of five states that does not collect sales tax. These are Alaska, Delaware, Montana, New Hampshire, and Oregon.

What is sales tax?

Sales tax is a consumer tax that is charged on most goods. As a retailer, you collect this tax and pay it to the IRS. You can find out your tax rate here. It is important that you do check it as tax rates can vary greatly. Some rates are state-wide, while others apply to certain cities and counties.

When do you need to pay sales tax?

When you make sales to buyers within your state, you need to collect sales tax. Generally, when you sell to buyers outside of your state, you do not need to collect sales tax.

In some states, you also need to collect sales tax on shipping and handling charges. It’s best to speak with your local county clerk office about this if you are unsure of your obligations.

In order to pay your taxes, you need a tax ID.

Getting a Tax ID

Getting a tax ID is free and pretty straight forward; most states have an automated process that you can complete online. This saves you a lot of running around town!

Each state has their own state website that you can visit to learn about your local tax obligations and get your tax ID. Most of these state websites use can be found at www.’statename’.gov  or www.texas.gov, for example. State websites that do not follow this format are listed below:

www.ca.gov (California)
www.mass.gov (Massachusetts)
www.state.mn.us (Minnesota)
www.state.ny.us (New York)
www.ncgov.com (North Carolina)
www.sc.gov (South Carolina)
www.sd.gov (South Dakota)
www.wv.gov (West Virginia)
 
What other taxes might I be liable for?

Depending on how much income you are bringing in, and where you are based, you may be liable for other taxes in addition to sales tax such as income tax. It’s best to speak with an accountant if you are unsure and in need of personal advice.

Do you find collecting and paying sales tax a drag? Have you got some snazzy systems in place to make it easy for yourself? Share your experiences below!