Taxes

How Your Small Business Can Navigate the New Online Sales Tax Laws

Jul 28, 2018 • 3 min read
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      The recent supreme court ruling that validated states’ right to collect sales tax from online sales to customers in their states has left a lot of business owners wondering what to do next. And, if you sell merchandise online, you’re now responsible for the cost of both paying sales tax and being compliant.

      Not to fear, though, there’s a few easy ways to deal with the new ruling that won’t completely break your bank.

      Invest In Software

      Each state has various compliance laws and tax rates that vary by district. This means you not only have to calculate the tax rate for all online sales, you also have to make sure your filing is compliant with local laws. This is just a terrible mess that’s easily avoided by paying someone else to do it.

      TaxJar, for example, is a software that plugs right into your online store. It takes the information from your sales and calculates the sales tax rate for you. It also goes through the trouble of auto-filing your tax return in every state and district that your paying customers reside.

      There are other software suites that can handle the job of tax filings. Avalara, for example, not only files your sales taxes in compliance with state law, they also file for exemptions. It’s another level of automation that could, in the long run, save a lot of money.

      Do It Yourself

      Attempting to comply with state tax laws is something that can be undertaken, but there are a couple things you should consider beforehand:

      • How many online sales do you make per month?
      • How varied are the states from which people buy your products?

      If online sales are more of an afterthought for your business, it may not be worth it to invest in a software suite. Additionally, if your sales tend to be geo-specific—selling personalized Nevada license plates, for example—then you probably needn’t invest in fancy software.

      Calculating the sales taxes for a single state or even a couple states is manageable. But, that will require you learning a thing or two about sales tax.

      You’ll have to learn the proper way to file sales tax in the states and districts where your products are sold. You’ll also need to know the specific rates of tax in those areas. Additionally, it would be important to learn about exemptions in the areas where your products are sold so you can save some change.

      Here’s the Bottom Line

      The simple fact is that it’s easier to automate than to try to do it yourself. There’s just a lot of little speed bumps that can come along, details that can be looked over, etc. Luckily, there’s plenty of options out there for you to choose from.

      The next step is to find the solution that’s right for your business so you can stop worrying about the state and keep your mind on your business.

      About the author
      Andrew Mosteller

      Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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