Sales tax training can help eCommerce brands understand their options when it comes to managing sales. Often a complex, time-consuming process, sales tax management is simplified through software that can make it easier to stay on top of sales tax requirements. Having a basic understanding provides a solid foundation to know when and how to choose the right solution for your needs.
With this in mind, here’s some sales tax training to help you assess how to best handle tax within the U.S.
1. What Services are Subject to Sales Tax?
Traditionally, the application of sales tax has been simple, but the rules for when it applies can be confusing. Legislation for eCommerce purchases vary from state to state around the types of goods and services taxed during online transactions, the sales volume brands need to complete before reaching economic nexus and expectations for filing.
Because of the state-by-state variance, there isn’t a one-size-fits-all approach to which services are subject to sales tax. What’s more, rules can change on a year-to-year basis. For example, in October 2019, four states changed their nexus laws and another 11 states altered their marketplace facilitator legislation. Sales tax management software can track your nexus responsibility, manage your sales as well as collect and report all sales tax to the state.
2. What is Sales Tax and Use Tax?
The difference between sales and use tax can be subtle. Sales tax is a fee applied as a proportion of the price paid for goods or services, as defined by state laws. Paying sales tax is generally the responsibility of the end user. Use tax, on the other hand, is a tax applied to the use or storage of a taxable item when sales tax has not been paid. Use tax typically isn’t charged in instances when sales tax is collected.
3. What Is a Tax Form and How Do I File It?
A tax form is a document used to record sales tax that is collected and provides accurate information to government agencies performing audits. Because states, counties and even local governments may have different requirements for recording and filing tax forms, an eCommerce business will have a wide range of forms they must submit over the course of a year. Check out our guide to filing in different states to learn more.
Manually managing all of these forms can be overwhelming. Identifying the correct document, finding the right data and filing on time can be tedious and distract from your primary goals as an eCommerce business. The good news is that many government bodies monitoring sales tax accept online forms, so tax management software can create forms, gather relevant data and file the documents on your behalf.
4. Where Do You Mail Your Tax Forms?
This is another basic sales tax management process that will vary in different jurisdictions. Most states and counties have agencies within the government responsible for handling tax-related issues and forms. Online tax filing allows you to track taxes electronically and automatically file forms directly through a sales tax management platform.
5. Can Taxes Be Done Online?
Yes, you can file taxes for many states online. This is particularly beneficial as you don’t need to create a complex mailing list to send different forms to different states at various times during the year. Instead, a tax management app like TaxJar can manage these processes for you and file directly online.
Tax training can help you understand your responsibilities as an eCommerce store owner and know what to look for in solutions. From there, tax management solutions like TaxJar can make day-to-day management much easier. We provide easy-to-use software that lets you choose the right solution for your business. Start a demo today to get started automating your sales tax management.