Let’s be honest. Sales tax has gotten pretty confusing for creative business owners, especially with how much digital sales have grown. I’m sure you’ve caught yourself asking, “Do I collect sales tax? Does the sales platform collect tax for me? Why can’t I just focus on creating beautiful things?!” I agree. It sucks. But, it’s much better to handle correctly from the get-go to avoid nightmares and a long headache come next spring (AKA tax season).
Today, I’m going to cover sales tax for online sales specifically. There are so many platforms on which you can sell your products, and unfortunately, there’s no standard for how each of them handle sales tax. So, here is my rundown of each platform and how they do sales tax!
First, let’s go over how you know whether or not to collect sales tax in the first place. The short answer is that it varies by state.
For example, I live in Missouri, where sales tax is not required for handmade orders. So, if I were purchasing custom-made throw pillows from Pennsylvania, I would not be charged sales tax because my shipping address is in Missouri. But, if I were the seller, and my customer lived in Pennsylvania, I would adhere to Pennsylvania’s state sales tax regulations.
The sales tax is determined by the shipping address of the purchaser.
Now that you know some of the different ways to collect taxes, you need to make sure that you’re filing these taxes correctly. Since you are self-employed, you are required to fill out tax forms quarterly instead of at the end of the year. Here are a few
Doing your sales taxes doesn’t have to be stressful! If you are capable of starting and running our own business, you are more than capable of filing your taxes. Have you completed the sales tax piece of filing and are ready to learn what business expenses to write off?