Concerned about handling Amazon sales tax if I do FBA

[youngtrep]

Hey everyone, I am finally (after a few manufacturing delays) ready to launch my first e-commerce product. It is a custom formulation supplement and I was planning to start selling solely on Amazon, then move to an e-commerce platform. I signed up for my sellers account today and am working on creating the listing, but I am concerned with all of the sales tax requirements if I decide to do FBA. I am registered to pay sales tax in my home state of NJ, but the thought of keeping up with sales tax in a bunch of other states depending on where Amazon has me send the product is a bit daunting. How have those of you selling on Amazon handled this and is it that difficult?

 

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[Trivium iz rC]

The biggest pain is registering with all the states & figuring out if it's an "Origin" or "Destination" based sales tax state. Amazon can collect the sales tax for you as long as you give them your sales tax I.D # for every state you have inventory in. I use software to track my State, city and local sales tax numbers. Check out taxjar.com & blog.taxjar.com

GL

Kosta-B

 

[AroundTheWorld]

Funny as I was JUST researching this.

You will want to learn about Nexus.

A few of the pages I just visited...

http://www.salestaxinstitute.com/resources/sales-tax-faqs

http://outright.com/blog/what-is-nexus-a-sales-tax-guide-for-online-sellers/

http://www.shopify.com/blog/4252422-product-update-tax-calculations-by-zip-code

 

[JAJT]

Amazon lets you print out a tax document from Seller Central.

I would personally not worry about it when starting out and just give that document to an accountant come tax time and let them figure it out for you.

 

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[youngtrep]

Amazon lets you print out a tax document from Seller Central.

I would personally not worry about it when starting out and just give that document to an accountant come tax time and let them figure it out for you.

The problem is, if you try to do it properly you have to pay sales tax to the other states on a monthly or quarterly basis. It would be fine if I knew where the warehouse was going to be, but they are in 12 different states which sounds like a nightmare.

 

[Kak]

Yes the compliance is pretty ridiculous. I spend more time on this shit than running this business.

 

[youngtrep]

Yes the compliance is pretty ridiculous. I spend more time on this shit than running this business.

Would you recommend using FBA then, or when starting out self-fulfill to avoid taxation issues in other states? I suppose I could also choose an outside fulfillment company that is only in one jurisdiction.

 

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[Kak]

I use FBA and I have a CPA deal with it like JAJT alluded to. That doesn't mean it isn't a pain in the a$$. I would never self fulfill though.

You can also pick one fulfillment center too I think it is called centralization or something. It costs an extra 20 cents per package. All of mine end up in Tennessee. The best part is they don't make you split up master cases and shit when you do this.

 

[JAJT]

It costs an extra 20 cents per package

I may be wrong but I think that's a cost per unit, not package.

I got dinged with this when Amazon wanted me to split a shipment into 3 or 4 separate shipments to send to various warehouses. I said "F*ck that" pretty quickly since from Canada it costs more to ship 3 or 4 times than it does to take a few cents hit per unit (which is nuts in itself).

 

[Kak]

Yep that's what I meant. Sorry.

 

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[Kak]

Amazon lets you print out a tax document from Seller Central.

I would personally not worry about it when starting out and just give that document to an accountant come tax time and let them figure it out for you.

Lol Canadian.

 

[mikey3times]

For anyone considering shipping to one place, here is how you do it. Took me a while to find it...

1. Go to the settings for "Fulfillment by Amazon."
2. Under Inbound Settings, click Edit.
3. Select your preferred Inventory Placement Option - Distributed Inventory Placement vs. Inventory Placement Service.

As of April, the fees have increased...

Standard Sized Unit, 1lb or less: $0.30
Standard Sized Unit, 1lb-2lb: $0.40
Standard Sized Unit, more than 2lb: $0.40 + $0.10 per pound for everything above 2lbs

 

[mikey3times]

OK, so I am sending some of my inventory to California. I go to sign up to pay sales tax in CA. I need a Secretary of State number so I look into Foreign LLCs since my LLC is in another state. Holy crap, California requires that Foreign LLCs pay a corporate tax of $800 per year. I don't expect to make enough money in California to cover the $800 tax.

Anyone else deal with this when sending to an Amazon CA warehouse?

 

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