Friday, April 1, 2016

Tips for Conquering Sales Tax If You Sell Products On Multiple Channels

Selling your products through just one channel is so 2000s.

Okay, so maybe I’m exaggerating, but it wasn’t very long ago that selling online through multiple channels like eBay, Amazon, or your own website was a major chore. You had to update multiple different listings every time an item sold—and hope very hard that you wouldn’t accidentally sell the same item twice on two different platforms. And that was just one of many potential snafus.

These days, though, technology has made it simple to list and sell your items in multiple places. You might sell your premium line of hot sauce on your own website, package it in bundles on Amazon, and even distribute it in a brick-and-mortar store. And there are inventory trackers, fulfillment services, and more to make this simple… And very, very lucrative.

Of course, expanding your business also comes with administrative hassles—and one of those hassles is handling sales tax for all every channel you sell on.

Sales Tax 101

But let’s rewind real quick. Awhile back I wrote a Sales Tax 101 Guide for small business owners on this very blog. It detailed how to handle sales tax, covering everything from signing up for your sales tax permit with your state to filing your sales tax returns.

One thing I didn’t mention: as your business grows, your sales tax obligations usually do, too. As you hire employees, store inventory in other states for faster shipping, use affiliates, or start drop-shipping relationships, you create sales tax obligations in more states. When you add multichannel selling to the mix, sales tax can get complicated—fast.

The Multichannel Sales Tax Challenge

Look at it this way: if you sell on just one channel, you process payment through one payment processor, run one report (if your channel even offers a sales tax report), and crunch one set of sales tax numbers. When you starting selling on multiple channels and combining these numbers, things get tricky.

Not only do you have to combine all of your sales tax collected on all your channels before you file your sales tax return, but the vast majority of states want you to break down your collected sales tax by state, county, city, and special taxing district. In the past, many sellers have found themselves combing through transactions one by one to determine how to fill out their sales tax filing. This process generally involves a tax table from the state, a spreadsheet, and an incredible amount of hours to get right.

And now imagine you have to file a sales tax return in more than one state!

Technology + Taxes

Fortunately, technology has come to the rescue. Sales tax automation solutions let you seamlessly combine all of your reports into a single one—laid out just the way your state wants to see it. No more poring over every transaction or wrestling with convoluted spreadsheets.

Just like it’s almost impossible to sell the same item twice these days, we now have technology to solve your biggest sales tax problems once and for all. For more than you possibly ever wanted to know about sales tax, check out our Sales Tax 101 for Online Sellers Guide and sales tax guides to each individual U.S. state.

The post Tips for Conquering Sales Tax If You Sell Products On Multiple Channels appeared first on Fundera Ledger.

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