I have an online shop and up until now I have only sold with ebay and Etsy who handle all state sales tax (collection and remittance). I want to have a standalone online shop and I have a few questions about how I handle state sales tax.
Appreciate any other info that might be important. Thanks!
This forum is for income tax questions. We can't help you with sales tax. Here are some basic answers to your questions. You will have to look elsewhere for the details.
"I am only selling from a state that does not have sales tax (NH). What does this mean for me? I do not have a very high volume of sales at this point"
It means that you do not have to collect sales tax on sales to customers in New Hampshire. Being in a state that does not have sales tax has no effect on your obligation to collect sales tax on sales to customers in other states. Sales tax is charged at the location where the product is delivered, not where the seller is located.
"I have heard I need to have "nexus" in a state before I even have to worry about submitting/filing anything. Is that true? If so, what are those thresholds?"
Yes, that's true. The thresholds are different for each state.
"If I do need to file sales tax for independent states, how and at what frequency do I do this?"
The requirements are different for each state. If you do have to collect and remit sales tax in a particular state, you are generally required to register with that state.
We haven't even touched on the issue of determining the correct sales tax rate for each location that you deliver a product to. In many states, the sales tax rate is not the same for the whole state. There are local sales taxes that vary depending on the specific location. A particular item might be taxable in some states and not in others. So you have to answer three questions for each sale.
All of these complications are the reason that you need to rely on an outside service to handle sales tax for you.
Thanks. Sorry, did not realize. As you can tell, I have not had to deal with state sales tax before. Thank you for the info. Where do I go to find information on thresholds, how to file, etc? I'm pretty lost. Not sure what your experience is, but when you say "outside service" do you have a recommendation for how to find this for an online e-commerce selling platform?
I'd recommend looking at each state where you plan to do business for more details. Each state and potentially local agency would be the entities imposing state sales and local sales tax. Sales tax returns are prepared independently from income tax filing requirements.