A follow up to our article, What's Information Design? And Why Should You Care? This…
If you’re thinking about opening an online shop; start by researching potential vendors. Identify which marketplace vendors can meet your needs when deciding who should sell your product or service.
Since several e-commerce merchants exist, make a list of your objectives. Then find a vendor who can best meet those deliverables on your list. In my case, I chose to select my vendor based on quality and procurement options.
Related Articles. The circumstances leading me to start my online stop, are chronicled in my first article, Starting An Online Shop? Stores Open For This Absurd Reason. My second article, Launching Your Own Online Shop, Starts With Your Goals outlines my challenges towards my goal.
As I did my research, a term called sales tax nexus kept surfacing. It’s a term I certainly needed to understand better; and without hesitation this became my next objective.
Objective: What’s Nexus?
Research what’s sales tax nexus and understand it. Reach out to my accountant and any additional resources for help.
Selling Online: How Does Nexus Affect You?
Sales tax nexus is the sales tax you must collect when you meet certain criteria within specific states. Every state has a different definition of sales tax nexus. But most states include having a “physical presence” or a certain “economic connection” to justify having sales tax nexus. Here’s the sentence I need to state, I’m not an accountant or lawyer and you should consult a specialist to better understand the rules that pertain to you when selling online.
But in general, here’s a list of how sales tax nexus could affect you:
- Having an office, home office, or store location in a state
- Having an employee, salesperson, contractor in a state
- Owning a storage facility or warehouse in a state
- Storing inventory in a state
- Having any affiliation in a state that involves a 3rd party
- Even temporarily doing business in a state like a trade show or craft fair may have nexus
Some states consider a business having sales tax nexus if a certain amount exceeds in sales volumes or income. That business would need to fill out paperwork to collect sales tax in that state.
As a start up I had sales tax nexus in my state, and in the state my vendor for-filled my orders. All other scenarios did not apply to me. I did not have a warehouse nor any employees that served my online store in any other state.
To better understand my responsibilities, I spoke to my accountant. I was told they weren’t versed in e-commerce transactions, and I needed to speak with someone who had answers to my questions. I kept searching online, but the majority of content I found focused on businesses who served a larger audience. Finding videos on small start ups under the model I wanted to use was almost non existent. I did find, a simple solution. A WordPress plugin—that would figure out the sale tax and shipping for me—but for a monthly fee. As a new start up, this was not an expense I wanted to incur . . . not just yet.
Answer In Unexpected Places
The answer came after much research and reading over forums. I need to focus on selling in my state first to see how my sales goes. Then if all goes well add the plug-in option to my site and sell to other states. Not the most ideal option, but a way to start online without getting too caught up in sales tax mayhem.
While I figure how to add my state’s sales tax to Woo Commerce, I’ll set a new objective.
Objective: Create an online shop that ties into my website
Research what the actual cost will be to produce my products, and then calculate my pricing for my online shop.