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Thread: Launching E-store, sales tax unclear

  1. #1
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    Default Launching E-store, sales tax unclear

    We are thinking about launching a small website to sell our hand made tshirts. In NY, there is no sales tax on clothing under $110, but we believe our local district/county has a small tax that is not waived for clothing. We are not sure if we should program our website to collect sales tax on these shirts or not. We are not looking to big a big $$$, just a small, almost craft operation. However we want to follow all rules. What if we only sell a few shirts here and there. Is it even considered a real business? Any advice regarding collecting sales tax for a very small web business, selling only handmade shirts would be appreciated. Looking forward to the conversation here.
    Last edited by Kristin; 03-05-2017 at 09:34 AM.

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    I have an online store, although I don't sell clothing. It's best if you read up on NY/county/local sales tax laws online if they are available online. I know that Virginia tax laws, where I am, are. If not, then you should consult an accountant in your area who is familiar with NY sales tax law.

    What I really can offer you is commiseration. Sales tax law is a real pain in the back end. If you're a brick and mortar store, it's easy peasy. Just set up for your local taxes. But if you're online it gets extremely confusing. When I launched my store, I thought I would start out being a good business citizen so did some research and tried to register to collect/remit sales taxes in the several states where I had drop-ship suppliers. Later, I unregistered for all but one. My sales volume is super low, so I didn't even have any sales in those states to make it worth the paperwork. And you pretty much need to put an attorney on retainer to research all of the state and local tax requirements so that you comply correctly. The sales tax streamlining effort is taking too long and accomplishing too little to be of use yet.

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    I am not an expert on New York sales taxes, but what we have found is the main reason to collect sales tax from your customer is to pass that tax along. You can choose not to collect, but you will have to pay it to the state.

    We were in Illinois selling on Amazon and at times we collected and other times we didn't, but we always filled out an ST-1 yearly and paid the state based on our sales.
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    I remember doing a NY based eCommerce website a while back, where the client expected most customers to also be in the NY area. The tax settings were insane. There was a different sales tax rate depending on the county they were purchasing from. I must have put in 20 different tax rates for the state of New York.

    I didn't do the legwork, the client did and they needed to charge sales tax based on the fact that they expected most orders to also be from NY.
    You definitely want to double check that. Just call the state tax board (or whatever it's called).

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    Yes, you will have to collect sales tax for sales within the state. Depending on your state's rules, you might have to collect tax based on where the buyer is located or based on where you are located, you need to get that cleared up, since you're not hand-delivering the item. Anything out of state is currently untaxable unless you have a physical presence in that other state (because they can't come collect it across state lines).
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    Check out this website: www.avalara.com. They are the go to company for help with multiple sales tax.

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