Online Taxes/Pricing Guide for Ecommerce Websites
Created On: July 26, 2021
Created By: SC-Developer
For many years, business owners and the government played the cat-and-mouse game when it came to paying taxes. However, thanks to the advancements in technology, governments have finally caught up and have started to take taxation for online revenue earned more seriously. Over the past decades, governments have worked closely with online businesses to help them report their income and have simplified the tax process, along with lowering tax compliance rates to encourage ecommerce business owners to pay taxes.
Should You Pay Sales Tax On E-Commerce Sales?
The short answer is, yes, you do. Ecommerce business owners are required to assess sales taxes and also collect and remit them to the proper taxation authorities, depending on the country they live in. This information is usually provided on the taxation department’s website. This is a necessary requirement, except for wholesale good or raw materials, including retail businesses, which are required to collect sales tax on the goods that they sell.
The constantly changing taxation laws can easily make ecommerce businesses end up in trouble which is why the legislation should be monitored by business owners so that they are abreast of the latest rules and regulations when it comes to taxes/pricing.
Adjusting New Sales Tax Laws for Ecommerce Businesses
While staying in the know when it comes to the ever-changing taxation laws for ecommerce businesses is not easy, it is necessary. Once an ecommerce business owner prepares their business for eligibility, they need to find out how much of the sales tax to charge along with other important factors such as its collection, tracking and payments. Many times, business owners need to put new systems in place just to make sure that they are meeting the requirements of the taxation laws.
Tracking Ecommerce Sales Tax Laws
While more established ecommerce retailers are going to have an advantage over entrepreneurs and startups, it is up to small business owners to make sure that they remain compliant with the changing tax laws in the countries they operate in. This is mainly because small business owners do not have the deep pockets of large ecommerce platforms that use multiple resources at their disposal to quickly adjust to the changes in tax laws.
If you are operating in a state that does not have a standard flat sales tax rate, then you will need to calculate sales tax based on the county the purchaser is in. This can get complicated very easily, which is recommended for ecommerce businesses to use a point of sales platform that also tracks tax liabilities. Certain POS systems have been designed to integrate with accounting software that’s capable of processing different state sales tax laws on the fly, which is a great advantage, especially for small business owners.