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Sales Tax and Amazon: What You Need to Know

Josh Owens
Jan 4, 2018 10:01:07 AM

Online Retailers and Sales Tax

If your brand or manufacturing company works primarily with traditional brick-and-mortar stores but you are preparing to also sell online, the first step in calculating sales tax is to first determine where you have a sales tax nexus (a presence in a certain state). As all states are calculated differently, each state must be filed individually. Researching, registering, filing—it’s an incredibly convoluted process that is only heightened when brands bring third party marketplaces and warehouses like Amazon into the equation.

Taking it a Step Further on Amazon

Unfortunately, if you’re looking to sell merchandise through an online marketplace such as Amazon or eBay, the sales tax filing process is extremely complex. Because these companies hold product in their warehouses, they would consequently be identified as ‘Inventory’ in your sales tax nexus. With more than 70 Amazon fulfillment centers across the country, brands would be required to file in nearly every state.

While one would think the Amazon filing process would be streamlined by now, unfortunately it’s not. From gathering individual state tax codes to actually turning on the sales tax collection program, there are plenty of ways retailers can take a wrong turn.

Making Online Retailer Sales Tax a Breeze

By working with a single trusted seller, collecting sales tax from online sales is no longer a hassle. Not only is there no repetitive data gathering or number crunching, but brands don’t have to get their hands dirty—the reseller calculates it all. Because many online distributors buy merchandise directly from a brand in advance, they become the technical owner, and because of this, they are the ones who are responsible for filing sales tax for Amazon and other marketplaces. Instead of dealing with the tedious processes and complexities that come along with filing sales tax as an Amazon seller, a trusted third party can take these frustrations off the table completely.

Josh Owens
CEO, SupplyKick

Photo by Helloquence

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