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no statute of limitation
Keep In mind sales tax has no statute of limitations. Due to covid and the states sales tax revenue plummeting, they will be looking at eCommerce audits for sales tax revenue sooner rather than later. If you do not collect sales tax as required, the state(s) will complete their audits of your sales channel, then send you a bill for what they calculate you owe. This bill will include late fees, fines, panalties and interest from your first sale that met their threshold into their state, then going forward for all your nexus sales.
sales tax = different bank account
Make sure you place all the sales tax monies you’ve collected into a separate bank account, do not mix these funds with your general operating account. These sales tax funds are trust funds with the individual states and not your money to use or spend. Every penny must be acocunted for on each states sales tax return filed then turned over to the state.
sales tax license is required!
Make sure you obtain a sales tax license in hand first before you start collecting sales tax for any state. Collecting without a license is illegal, and can be fined accordingly.
you must collect sales tax!
When you sell online and ship to an address in a state that has eCommerce sales tax collection laws, you are required to collect sales tax on each sale made once you’ve met their theshold. We can complete a sales tax nexus analysis by sales channel so you’ll know where you have nexus and in which states you’ll need to register for a sales tax license. We can file your application with the individual states as needed. Then file/pay your sales tax return with each state based on your individual filing requirements, either monthly, quarterly or yearly.
eCommerce accounting is complex and requires a degree in Accounting and years of hands on experience creating financials statements that detail full inventory costs. Inventory valuation including landed cost by sku is required to calculate profitable pricing by product. All sales channels should be accounted for by order and payment channel then balanced monthly!
The state of Kansas still have not voted on changing the economic threshold from zero to $100k.