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How To File Sales Taxes

In our previous article, we discuss how to determine whether your eCommerce business needs to collect sales tax. In this post we will discuss what to do once you confirm that you have nexus in certain states/jurisdictions.

Here are the Next Steps Once You Confirm Your eCommerce Store Must Collect Taxes

Once you have nexus in a state, you need to set up as a tax-registered business and do everything by the book. That generally means following these three steps.

1- Register for state sales tax permit: Apply with the State Department of Revenue. You must have a valid sales tax permit before you can legally collect sales tax. The tax permit is the very first step, and it’s serious, too! If you begin collecting sales tax without the permit, some states may consider this tax fraud. The good thing is that many states allow you to register online. Usually you’ll either receive your sales tax permit number instantly, or within 10 business days. If you register via snail mail, it may take 2-4 weeks to receive your sales tax permit.

Here’s some standard information you’ll need when registering for a sales tax permit:

  • Your personal contact info
  • Your business contact info
  • Social security number (SSN) or Federal Employer Identification Number (FEIN) also known as
  • Employer Identification Number (EIN)
  • Business entity (sole-proprietor, LLC, S-Corp, etc.)
  • Your NAICS Code (The NAICS code for online stores is 454110)

Note: You can register in all 24 SSUTA streamlined states at once, with one registration process. Sounds great, but this may come with some extra tax liabilities. You’d likely end up liable for tax in some states even though you don’t have nexus there, simply because you’ve registered. Learn more on the SSUTA tax registration page.

2- Collect sales tax: Begin adding sales tax to every transaction in the state, and set aside that amount for Step 3.

  • Set up your shopping carts and online checkouts to collect sales tax.
  • Configure them for “origin-based” or “destination-based” tax rates, according to state laws. And make sure you have the right tax rates.

Note: There could be more levels than just a statewide sales tax! There’s state, county, city and other local sales tax rates.

3- Remit sales tax: All that sales tax you’ve collected from customers must be paid forward to the appropriate state agency.

  • Take note of the frequency of returns (quarterly? annually?) and the deadlines for filing and payment.
  • State sales tax returns don’t just want to know how much tax you collected in the entire state. They want tax collection broken down by county, city, and any other locality.

Note: File “zero reports” if you didn’t collect anything in a certain jurisdiction where you’re registered with a tax permit. Yes, you still have to file. This is an obligatory check-in!