Internet sales tax is now becoming an integral part of an ecommerce business, but that was not always the case. Back in the early days of ecommerce, consumers and retailers alike were able to enjoy freedom from paying this tax. Regulations were almost nonexistent at the time and online shoppers grew accustomed to not having to pay website sales tax. As a result, e-commerce businesses have gotten an edge over their offline counterparts.
Unfortunately the free ride is almost over. Many states are beginning to crack down and demand payback for the loss of billions of dollars worth of tax revenue from past years. Retailers that are not selling online are also arguing that online retailers have an unfair advantage, because they don't have to charge sales tax. Both groups are calling for a new national internet sales tax to be enacted.
For now, the majority of states only require online retailers to collect internet sales tax from customers who reside in the same state as the actual location of their business. Some states have stricter rules and count merchant account, distributor, warehouse, drop shipper and sales representative locations also. It is important to read the tax regulations of all the states with any kind of connection to your business. If you do not pay the applicable taxes, you will have to face consequences that could significantly hurt your business. Not only must you pay back the amount owed, but also the interest and penalties for each year that you did not pay.
Follow this checklist to help you get started:
- Research each state that your business is involved with and find out whether or not you need to collect internet sales tax from consumers of that state
- Register to collect taxes in the state or states you are required to
- Collect website sales tax automatically through a good e-commerce/shopping cart solution
- File a tax return to the appropriate state(s) and include total proceeds with your return
There are many important features to look for when selecting an e-commerce solution that is able to automatically collect internet sales tax from select customers. They include:
- Easy to use website sales tax wizard built into the store admin
- Tool to automatically calculate the tax amount during checkout
- Simple setup which allows you to choose tax percentage by state, county, zip code or country
- Have the ability to mark down nontaxable products
- Support Canadian tax system
- Determine if tax should be applied before or after discounts
- Determine whether certain customers or customer groups are exempt from taxes
To ensure there are no problems on your tax return, you need to have a reliable sales tax software to calculate and record accurate internet sales tax. Not only does your ecommerce solution have to provide this feature, set up also needs to be easy enough so that you only need to enter the required information once and it will automatically do the rest.
What you need is a full service all-in-one hosting, design, and marketing software made specifically for e-commerce businesses. One that lets you set up your store in minutes, and provides powerful tools to help with not only collecting internet sales tax, but also SEO, product marketing and mobile commerce. Check out the best possible e-commerce solutions available at http://www.makeanonlinestore.com and try them out yourself absolutely free, no credit card required!
