Greetings, everyone, and welcome.
My name is Chris, and in today's video
I'm going to be breaking down
the topic of sales tax
and how to automate this for your Amazon business.
Now, before we go ahead and get into that
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Now, let's go ahead and talk about sales tax.
So, I don't really see a whole lot of Amazon sellers
talking about this, and I'm not a CPA,
but I do have a background in accounting.
And everything I say in this video today,
there really isn't too much liability attached to it,
but I really think it's gonna make your business
a lot better and more efficient.
Now, before we get into that, I do want to say
that if you're out of the country,
or if you're in a tax-free state
that doesn't require you to collect sales tax,
you probably don't have to watch this video anymore.
So, that's really the first step
is figure out do you even need to collect sales tax.
Now, we are talking about Amazon here,
so something to keep in mind is,
is that even if you are in a tax-free state,
you may have your inventory in another state,
which kind of changes the rules a little bit.
So, you're gonna want to talk to a CPA about that.
So, if you're like me and you're in California
and you know, or just a state
that requires you to collect sales tax,
you're gonna have to collect it.
So, what the first step is that you're gonna need to do
is you're gonna need your file
for a seller's permit in your state.
And what this does is it legally allows you
to collect sales tax for any kind of business,
e-commerce, or whatever,
assuming you're selling taxable goods.
So that's something else you need to figure out.
But assuming you're selling taxable goods
and you're required to establish
a seller's permit in your state.
And from when you file it,
that's when you're supposed to start paying,
every three months.
And you can also purchase wholesale goods tax-free as well.
So that's something good to keep in mind as well.
And if you don't set this up,
let's say years go by
and that you aren't collecting sales tax
and they find out you're in the state,
you will not only have to pay
all those months or years prior to that when you filed
or whenever they come at you with this,
but you're also gonna be penalized as well.
So just do due diligence
and make sure that you sign up for this.
And all you have to do is just go to Google,
type in seller's permit and you fill out for your state.
You fill out some forms, and you will get a number
usually within 24-48 business hours.
And, from there, you take that number
and for Amazon, which is what we're talking about,
you go into your Amazon seller central,
you go to Settings,
you click on Tax Settings,
and what you're gonna do here
is you're just gonna keep following the steps forward
and keep clicking Continue
until you get to the state section.
Now, this is where you plug in
your seller permit ID,
and you're gonna plug in the sales percentage tax
that you're collecting for your state.
So, every state is different.
This is where you're going to need to reach out to your CPA
and see how much that you're gonna have to be paying.
And keep in mind this does change every year.
Your CPA will tell you that.
So, for example, the State of California right now is 7.5%.
And it also varies upon county as well.
So, like Santa Barbara County, where I'm at,
is actually 8.25%.
And keep in mind this for the year 2018.
This changes every year.
And, so that means that if I sell anything
to anyone in this county of Santa Barbara,
I have to collect 8.25% on taxable goods.
And once again, this is something you're gonna want to
reach out to your CPA about
to know how much you need to collect.
Now, if you notice you see a bunch of other states here.
Legally, you are required to collect sales tax
in every single state.
But, that means you have to establish
a seller's permit in all of those states.
And that means any state that you're selling in
that requires you to collect sales tax.
But what I was told,
and what I know a lot of Amazon sellers do
that are bigger than me,
they wait til the state approaches them.
So let's say I'm selling stuff in Kentucky.
Basically, I was told by my CPA
and what I'm doing is I'm waiting til
if Kentucky comes at me and says
look, you've sold XYZ goods.
We want you to pay this amount of sales tax.
And that's currently my strategy.
Now, I do think some people
should apply some common sense here.
If you see that you're doing a ton of business
in one particular state,
it might be best that you
establish a seller's permit in that state.
I'm not telling you guys what to do,
I'm just trying to help you guys.
That's something to think about.
So, let's say you go to your CPA,
you have the percentage in your seller's central account.
Now, what's an easy way to basically see how much I owe,
and how much I need to pay.
And, this is where the two services
that I'm gonna talk about come in.
There's two different services here,
and I'm sure there's more than that,
but the two that I personally checked out
is TaxJar and Taxify.
They're relatively similar.
Basically the same features except
I'm gonna be talking about TaxJar.
One, because I think it's more user-friendly,
and two, it's only $20 a month as opposed to $50 a month.
And I'll leave that in the description below.
But basically what this does is
it can link up your seller accounts.
So that includes Amazon, Ebay, Shopify.
So if you have a Shopify store,
if you're selling on Walmart marketplace, Etsy.
If you can think of it, they probably have it
integrated in their system, which is great.
So, you set up a $20 a month account.
They do have a 30-day free trial,
however, the 30-day free trial
only goes back 90 days for data.
If you want past the 90 days,
you're gonna have to pay the monthly membership.
From there, they will gather all of your sales tax data,
and they can see which state you sold the goods in.
And they will show you how much sales tax you owe.
And you can see this as the months go by.
And you're gonna be paying every quarter.
So, January through March is owed on April 31st.
April through June is owed on July 31st,
and that's really how it goes.
And so, those are the dates you have to pay it by.
If you don't pay it by the date,
there's usually some kind of penalty involved.
Now, the way TaxJar breaks this down is very nice.
So, when you pay this on the state's website,
there's certain numbers in columns
that you have to enter in.
TaxJar gives it just as you need
to enter this in on the site.
So, it's really easy to do.
Now, if you just don't feel like even doing this,
you can have them do this $20 per return.
So that's about an extra $80 per year.
I do think they have a yearly membership of $204,
which is slightly less than 20 bucks a month,
which is the one that I use.
And so, you can pay them $20 a month to do this on your own,
or $50 for the late return, if there was one that was late.
But the way they break this down,
it's pretty much common sense.
You just enter in the numbers accordingly,
and you're good to go.
And this is also cool, too,
because you can see the sales volume in each state,
so, like I said earlier,
if you see yourself doing a large amount of volume
in another state that you don't have a seller's permit in,
maybe this would be a good sign to say
hey, I think I might establish business in the state
and go from there.
Like I said guys, use your best judgment,
consult a professional,
but hopefully this video is going to save you a ton of time,
and help get you in the right direction going forward.
As always, you have any questions or comments,
leave those in the description below.
Let me know what you think,
and I'll see you in the next video.