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FBA Sales Tax – Part 1

We don’t want to sound like a broken radio by trying to convince you that the FBA business model is the best way for building a safe and profitable business on Amazon. However, Jerome Basilio’s team are open to continue their promotion concerning FBA, since we are 100 percent sure that it is worth it! That’s because we are completely transparent with our customers, and are ready to answer all questions concerning the FBA business model.

There are lots of sellers who are interested in Amazon FBA sales tax rates; therefore, today, we are going to talk about sales tax for Amazon FBA sellers. But, if you need a legal advice from a tax attorney, we recommend that you contact our partners from Prestige Auditor’s team, who are artists in their sphere.

Before jumping into our topic, we would like to mention that sales tax is a rule that every seller has to adhere to, regardless of the fact you are an online seller or an owner of a brick and mortar store.

As an FBA seller, you have to collect seller taxes in those states where you have a tax nexus and product taxability. Let’s try to figure out what these phrases mean.

Sales Tax Nexus

In other words, sales tax nexus means “connection to a certain state.” So, if you have a tax nexus in a state, it means that you can easily collect sales taxes from your customers who live in this state. Generally, you have sales tax nexus in your local state; however, you still have an opportunity to create nexus in different states. That’s because if you are an online seller who uses resources from a certain state in order to run your business, it means that you have a tax nexus in this state. So, if you are storing your FBA inventory in Amazon’s warehouse, you can collect sales taxes from the state where this warehouse is located.

Currently, there are nearly 27 states where Amazon has its fulfillment centers. You can contact Amazon in order to figure out in which state your inventory is stored.

We are rushing to bring you good news: if you run your business through an online marketplace, you are provided with an opportunity to release yourself from sales tax issues, since the marketplace where you run your business is required to collect sales taxes on your behalf. However, keep in mind that you must still have a valid sales tax permit and file sales tax returns in a timely manner.

Product Taxability

Well, once you determined that you have a tax nexus in the state where you run your business now, your main mission is to figure out whether the product that you are selling is taxable. As a rule, the biggest part of personal property is taxable, while services are tax exempt. At the same time, there are lots of product categories which are tax exempt or are taxed in different ways, based on the state where you run your business.

Once you have determined that you meet all the criteria for collecting sales tax in a state where your products are being held, you next step should be registering with that state and starting to collect sales taxes. We will talk about the entire process of how to get sales tax exempt in the second part of our blog.

Now that you know quite a lot about FBA sales tax, it’s time to find a reliable team who will help you start your FBA business in the best way. Fortunately, you should not look far, since Jerome Basilio’s team is right here! Give us a call, and we will provide you with tons of useful advice concerning the FBA business model. By working with our team, you can be assured that you are putting your money where it should go!

Jerome Basilio

Assisting businesses with Wholesale and Multimarket Management services is a passion of mine and that is why I formed Basilio Corporation, providing such services for 84 companies as of today. Basilio Corporation has sold a total of 52 stores for seven figures, in open digital exit broker companies. The company has partnered with Khachaturov Group, a leader in multiple industries, which has strengthened its resources. Over the years, I have used my experience to consult top players in the business, and mentored minds which became influential millionaires in the eCommerce sphere.