Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Getting Sales Tax Ready for Black Friday 2018
byNovember 1, 2020
As the official start of the Christmas shopping season, Black Friday is often called “the busiest shopping day of the year.” Many say that the “black” in Black Friday refers to the fact that many retailers will begin to turn a profit. Whether or not that’s actually true, we can all agree that Black Friday/Cyber Monday weekend will bring in a lot of welcome sales for eCommerce retailers across the country.
But this year is going to be a little different thanks to the recent Supreme Court decision that validated economic nexus laws. This year, the jump in gross sales you earn the weekend after Thanksgiving can affect not only your profit, but your sales tax responsibilities. As you prepare for the upcoming shopping season, make sure your business is fully prepared for possible economic nexus implications.
Track Your Sales
Since economic nexus is based on your gross sales and/or transaction volume, it’s very important to know where you stand. If you’re doing a large volume in sales and aren’t able to keep up with spreadsheets, we recommend using TaxJar’s Sales & Transactions Checker. This free tool tracks how many transactions you had within each state, as well as the total amount of gross sales delivered into each state.
Also, you’ll need to have clear tracking what you’re selling across all of your sales channels. Economic nexus isn’t broken up by sales channel, it’s tracked at the state level. No matter where you sell, all of your websites, platforms or marketplaces contribute towards your total count of economic nexus activity in a state.
Know the Thresholds
Tracking sales thoroughly is just the first part of the process. The second part is understanding what the thresholds are in the states you do business. If you’re selling only in a brick-and-mortar environment, you only have to worry about a limited number of states. However, running an eCommerce business is where things can get complicated because you’re now responsible for managing your sales tax nexus across the entire country.
And while the shipping destination is what determines which state has jurisdiction over the sales tax, it’s important to remember that you only need to collect in states where you have economic or physical nexus.
There are usually two parts to current economic thresholds. First, there may be a threshold for the number of transactions made. Then, there may be one for the amount of gross sales made. Each state’s sales tax commission will have information on whether there are current or pending economic sales tax laws on the books. But if you’re looking for a quick reference, check out our state by state breakdown of current economic nexus laws.
Prepare for Future Changes
If the Black Friday/Cyber Monday weekend sales will trigger economic nexus in new states for you, you’re not alone. Many businesses will find that the fourth quarter gross sales will push them over the thresholds. This is because most of the laws specifically state that the thresholds are per calendar year or in some cases, the previous calendar year.
Don’t panic. TaxJar is here to help. For about $100 per state (plus any state fees involved), we can help you get registered for a permit so you can start collecting and remitting sales tax wherever you need.
And if you’d rather do the legwork yourself, we have a helpful guide on how to register for a permit in every single state. It will give you the basic info on who needs a permit, how to register for one, and where to find more information about the whole process.
As the holidays approach, make sure you stay updated with the changes in economic nexus as they come. Subscribe to the TaxJar blog and we’ll update you as new economic sales tax laws are proposed, and when they take effect.
If you have any questions about how to manage your sales tax over the holidays or if your sales tax complexity is causing a sales tax headache, please reach out. We’d love to discuss if TaxJar Basic or TaxJar Plus might be a great fit for managing your sales tax needs.
Please note: This blog is for informational purposes only. Be advised that sales tax rules and laws are subject to change at any time. For specific sales tax advice regarding your business, contact a tax advisor.