• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Submissions
  • About Us
  • Contact Us
  • Aug 12, 2022
  • Startup
    • Creating a Plan
    • Funding a Startup
    • Franchise Center
    • Getting Your Office Ready
    • Making Your Business Official
    • Marketing Your New Business
    • Personal Readiness
  • Run & Grow
    • Customer Service
    • Human Resources
    • Innovation
    • Legal
    • Operations
    • Risk Management
  • Leadership
    • Best Practices
    • Communication
    • Green Initiatives
    • Open Culture
    • Strategic Planning
    • People Skills
  • Sales & Marketing
    • Advertising and Lead Generation
    • Marketing Innovations
    • Marketing Plans
    • Online Marketing
    • Relationships
    • Sales Activities
  • Finance
    • Budgeting and Personal Finance
    • Payments and Collections
    • Tax and Accounting
    • Pricing Strategy
    • Working with Investors
    • Working with Lenders
  • Tech
    • eCommerce
    • Hardware
    • Software
    • Security
    • Tech Reviews
    • Telecom
  • Shop

SmallBizClub

Helping You Succeed

Home / Ask SmallBizClub / Tax & Accounting / I am starting to get orders from out of state, how do I handle the sales tax?
I am starting to get orders from out of state, how do I handle the sales tax?

I am starting to get orders from out of state, how do I handle the sales tax?

1379 Views

Oct 16, 2013 By Rick Gossett

I am starting to get orders from out of state, how do I handle the sales tax?

Answer: Our response assumes that your question refers to sales tax on orders received from out-of-state customers via your business website, a catalog or other direct mailing, a print ad or perhaps word-of-mouth.
State and local sales and use tax laws vary; however, for sales made to customers in the U.S., when a business has no physical presence in a state, it typically has no obligation to collect sales tax in that state. Thus, if your business sells products or services only from a retail store or an Internet website business, you would collect sales tax only on sales of taxable products or services sold (shipped or delivered) to customers in your state of business. Sales to customers in other states would be exempt because they are bona fide interstate commerce. However, selling products through drop-shippers located in other states, going into a state to make sales calls, having sales reps in other states, and in certain states having sales affiliates based in those states, can constitute physical presence and create “nexus” – the obligation to collect sales tax in a state where you do not have a physical office. An important nexus criteria is “continuous” presence. For example, e-commerce companies often collect sales tax on all Internet sales because they have sales representatives who actively solicit in each state.
If your business is obligated to remit state and/or local sales tax in other states, you would need to comply with the sales and use tax registration, collection, remittance and reporting requirements in each of those states. You can review the following websites for information on sales and tax regulations, including registration, reporting and remittance requirements, and taxation of out-of-state and Internet sales:

  • Sales Tax Support: salestaxsupport.com

Internet sales tax:

If your business is using drop-shippers located in other states, you will need to research the state and local sales and use tax requirements in each state where your drop-shippers are located to determine your sales and use tax obligations in those states.

If you are unfamiliar with your business’ state sales and use tax obligations, we strongly recommend that you review your specific business operations with a state sales and use tax specialist with your state Department of Revenue and your local tax advisor or CPA, both of whom can help you determine your sales and use tax responsibilities. Also, if shipping your products or offering products for sale online to customers outside the U.S, we recommend that you contact local tax and legal professionals in the countries where you ship/deliver your products to clarify the local tax and other regulatory requirements. If you need a tax advisor for your business, we have had good feedback on Padgett Business Services, which has franchisees around the country. For a referral to a local office, call (800)723-4388.

Filed Under: Tax & Accounting

Rick Gossett

Rick Gossett

As COO of Tarkenton Companies for more than 20 years, Rick has been responsible for business software development, unique partnerships, business educational content and consulting, and more. Rick was the originator of Tarkenton Companies’s consulting service and initially handled all of the questions himself. Prior to joining Tarkenton Companies, Rick owned and operated a private practice as a CPA. Prior to that, he was a Senior Manager at Pannell Kerr Forster in tax and audit, as well as Principal in Ernst & Young's small business advisory group.

Related Posts

  • Long-Term Pandemic Impact on Online Retail
  • Small Businesses Owe Big

Primary Sidebar

From the Editor’s Desk…

Small Biz Gems

“You can’t ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”  —Steve Jobs

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Subscribe to our Mailing List

Run & Grow

Why Businesses Should Treat Employee Burnout as a Risk Management Issue

Aug 11, 2022 By Andrew Deen

a-startup-goldmine--combining-healthcare-and-technology

‍9 Tips for Making Your Healthcare Business More Successful

Aug 9, 2022 By Charlotte Sylvester

employment-practices-liability

‍5 Business Liabilities That Can Cause You A Ton Of Trouble

Aug 9, 2022 By Jeremy Bowler

8 Factors That Influence The Price of an Aerial Platform

Aug 4, 2022 By SmallBizClub

Footer

About Us

Small Biz Club is the premier destination for small business owners and entrepreneurs. To succeed in business, you have to constantly learn about new things, evaluate what you’re doing, and look for ways to improve—that’s what we’re here to help you do.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Copyright © 2022 by Tarkenton Institute, Inc. All Rights Reserved | Terms | Privacy