How Multi-Channel Ecommerce Selling Affects Sales Tax

Online sales tax is defined as a consumption tax of taxable products sold and collected online. Currently, forty-five states—including Washington, D.C.—have online sales tax rules with revenue departments or tax collection agencies governing the processes. Many states revamped sales tax rules to include specific verbiage for online sales to ensure sales tax compliance.

How Selling on Multiple Ecommerce Platforms Affects Sales Tax

Selling on multiple ecommerce platforms does not affect the rate of sales tax you charge and collect; however, having multiple e-commerce platforms creates a need for synchronization of data in one place. There are multiple platforms to use, and Shopify offers various sales tax settings and automation in the collecting and reporting of sales tax data to ensure compliance with each state.

When Is Charging Online Sales Tax Necessary?

Knowing your nexus within your state and those where you sell products is essential. Most states are destination states, and a few are origin or hybrid states—this designation determines who you pay sales tax to.

Ultimately, you are responsible for collecting and paying sales tax on taxable products sold online as defined by the state you operate from. One exception to this is that, as the owner, you have the benefit of not paying sales tax on assets/inventory transferred to you as a personal transaction known as an owner’s draw.