Category: Tax Tech

Sales tax. You have to collect it from your customers, and how much you need to collect and when and where you need to collect it varies. With more than 13,000 sales tax jurisdictions in the U.S., knowing how to find the right sales tax rates can seem like the stuff of nightmares. 

But it doesn’t have to be. Sales tax software makes it easy to find sales tax rates and ensures you charge your customers the right amount.

What’s Usually Subject to Sales Tax?

Part of finding the right sales tax rate involves knowing the 4 W’s when you calculate and collect tax:

• What: What’s taxable can vary by jurisdiction. Some states don’t apply sales tax to clothing or other necessities while others do. In some jurisdictions, there’s no sales tax on digital products, like music downloads or e-books.
• Where: Where the buyer lives also influences the sales tax rate, particularly if you have nexus in their state.
• When: Some jurisdictions have sales tax holidays, during which certain products are exempt from sales tax.
• Who: In some states, nonprofit organizations and government agencies are exempt from paying sales tax. Others may be exempt from tax if they intend to resell the products.
  

How to Find Sales Tax Rates (the Hard Way)

Calculating sales tax seems fairly simple. You multiply the product price by the jurisdiction’s sales tax rate. For example, if your business is based in Pennsylvania where the sale tax rate is 6% and a PA-based customer buys $50 worth of products from you, $50 multiplied by 6% (0.06) is $3. 

Things get more complex when you sell to customers in other states where you don’t have a physical presence. You’ll need to determine where you have nexus and need to collect tax from your customers. And with sales tax varying across jurisdictions, the process can become complicated.  Mistakes can be costly and time-consuming as well. A simple error could result in a state notice and a potentially hefty fine from a state tax agency.

How to Find Sales Tax Rates (the Easy Way)

Learning the ins and outs of sales tax, then calculating the rates for your business is time-consuming — and we’d bet you have better things to do than manually calculate sales tax on each order. Fortunately, there’s a better way. 

The easy way to find sales tax rates is with TaxCloud. 

Our sales tax software gives you access to Taxability Information Codes (TICs), those ever-changing codes that let you figure out when, where, and how much tax to charge. Our TICs are up-to-date, meaning we’ll automatically calculate and collect sales taxes when applicable

When you set up your store, assign the appropriate TICs to your products. Our sales tax software can then apply the right sales tax rate to orders while accounting for exemptions and sales tax holidays. Everything happens automatically, so you can focus on what matters most to your business, not sales tax.

TaxCloud makes finding sale tax rates a snap. Register today and see how it works for yourself.

Selling online makes it easy to grow your customer base and sell more. With the right ecommerce tech stack, you can streamline inventory management, shipping, and payment processing. What often gets overlooked when building the best tech stack for your business is sales tax compliance automation — and if you ignore the sales tax elephant in the room, you’ll likely wake up one day to a bill and nasty notice from a state.

Following a few do’s and don’ts will help you avoid hefty fines and unexpected bills so you can get back to business.

Do: Look for Sales Tax Software That Integrates With Your Ecommerce Tech Stack

Sales tax management should be simple. The best way to simplify your sales tax management is to use software that easily integrates with your current ecommerce tech stack. We’re talking a few clicks, and you’re done. You shouldn’t have to be a computer or accounting whiz to get everything set up.

Do: Make Sure You Calculate and Collect the Right Amount

Unfortunately, sales tax isn’t uniform across the U.S. Some states collect 6 percent, some 8.5 percent and some states don’t collect sales tax at all. Your business’ sales tax obligations can vary by state, based on your sales or transaction volume. 

Rather than calculating sales tax yourself for each of the sales tax jurisdictions in the U.S., let sales tax software do the math for you. When added to your ecommerce tech stack, your sales tax software will figure out your nexus (or connection to each sales tax jurisdiction), calculate how much tax you need to collect, and collect the tax for you with each sale.

Don’t: Pretend Sales Tax Doesn’t Exist

You can’t be an ostrich about sales tax, no matter how tempting it is to bury your head in the sand. Sales tax generates a considerable amount of revenue for states and municipalities. And those states want their money.

If you don’t pay up, they’ll come for you. And it won’t be pretty.

Don’t: Stress About Your Ecommerce Tech Stack

We don’t mean to scare you—sales tax shouldn’t make you lose sleep at night or cause you to abandon ecommerce altogether.

With the right sales tax software in your ecommerce tech stack, you don’t have to stress or fret about collecting, filing, or paying tax.

Do: Use TaxCloud

To avoid getting on the wrong side of the tax person, you need to do three things: calculate, collect, and file sale tax correctly. TaxCloud does all three for you. We like to say we eat sales tax for breakfast because we’re tax geeks and sales tax is what keeps us going. 

We created our sales tax software for growing companies and made it easy. While you can set up and use TaxCloud independently, we also have a team of TaxGeeks standing by, waiting to assist you however they can. 

Sign up for TaxCloud today and get your ecommerce business set up for success.

If your online vintage store sells a trinket to a customer in New York and another in Oklahoma, do you know how much sales tax to charge for each purchase? No need to lose sleep worrying that you’re not collecting the right amount –  sales tax software can do that for you. 

Forty-five states, plus DC, collect sales tax, at varying rates. On top of that, 38 states allow for the collection of local sales tax. That’s a lot of sales tax.

From calculating tax amounts to collecting them, sales tax software keeps you compliant without having to think about it.

What Is Sales Tax Software?

Sales tax software calculates, collects, and remits state and local sales tax for your business. 

In the past, businesses only had to collect state or local taxes if they had a physical presence in the state. That changed in 2018 when the U.S. Supreme Court ruled that a physical presence wasn’t needed for a business to collect sales tax in a state.

Now, e-commerce businesses that meet an economic threshold in certain states must remit sales tax to those states. Sales tax software takes on the role of figuring out where your business needs to collect tax and how much you need to collect from each sale.

Calculate the Right Sales Tax

Sale tax rates vary by state or locality. On top of that, the items that are subject to sales tax vary by state. Buyers in Pennsylvania don’t have to pay sales tax on clothes. Shoppers in the neighboring state of Maryland do. 

Sales tax thresholds also vary from state to state. Your business must start collecting sales tax in Pennsylvania once you hit $100,000 in sales. In California, the threshold is $500,000. Some states have a threshold of a specific dollar amount or number of sales.

It can be maddening to figure out how much tax to collect and whether you need to bother. But a sales tax software platform can do the math for you, even letting you know when your business has exceeded the threshold in a certain state and needs to start collecting.

Collect Sales Tax Online

You have to collect the right sales tax amount on each purchase. Sales tax software handles that for you, ensuring you collect the right percentage on the correct products. When tax filing time comes around, you won’t be left facing a steep bill you can’t pay.

Manage Exemption Certificates

Remember that not every buyer has to pay sales tax. Some states exempt non-profits from paying tax, and those with a multi-jurisdictional resale certificate can also get out of paying tax on certain purchases. You can configure your sales tax software to collect and apply exemption certificates, reducing everyone’s hassle and headache.

Create Sales Tax Reports

As tax filing season rolls around, you can use sales tax software to generate reports for each state where you had a liability. Those reports make it easy to file your returns with each state. Depending on your service plan, the software may even file your state sales tax returns for you.

You don’t want to think about sales taxes. So get a software program that does all the heavy lifting for you. 

If you’re ready to take the first step, get in contact with our team at service@taxcloud.net