Do I need to collect sales tax?
How do I collect sales tax?
What is TaxJar?
Do I need TaxJar?
These are questions that I’ve seen posted in the Amazon FBA Facebook groups recently. I remember when I had those same questions and now feel that I should help answer them.
Learn About Sales Tax
I truly understand that sales tax is a very scary topic for new Sellers. The day that I signed up for my Seller account, I didn’t know that we even had to think about sales tax. When I later learned about sales tax filings and even business registrations, I almost quit Amazon!
But I jumped in and started with registering in my home state. Then I gradually added in my nexus states. I’m very happy that I didn’t let sales tax end my Amazon FBA career because now sales tax is no longer scary and filing those returns isn’t a big deal after all.
For anyone of you that is starting out with sales tax, here are a couple of helpful blog posts:
Sales Tax 101 for Amazon FBA Sellers: This is a guest post that Jennifer Dunn of TaxJar wrote. She does an excellent job with explaining why you need to charge sales tax and she gives you a general overview of how to get started. Jennifer is super-friendly and you can find her over at the Sales Tax for Ecommerce Sellers Facebook group.
Registering to Collect Sales Tax and Filing Your Tax Returns: I wrote this post that shows you the steps that I took to register for sales tax collection and for filing my returns. I wrote this post back in November 2014 so some of the state and warehouse information may be outdated. However, the general steps are still the same.
What is TaxJar?
TaxJar helps you with your sales tax questions, registrations and filings. They have blog posts and sales tax guides that tell you how to get started with sales tax and they keep you up-to-date with Amazon’s new warehouses and any new sales tax rules or changes.
For paid subscribers, they keep track of your due dates and tell you your gross sales in each state and how much you collected in sales tax. Plus, they’ll even file your state returns for you!
A little later in this post, I’ll take you inside of my TaxJar account so you can visually see how TaxJar helps you.
Do You Need TaxJar?
Back to the original question. Here are my answers depending on different situations:
- No if you choose not to collect sales tax.
- No if you collect sales tax and want to take the time to figure out Amazon’s sales tax report.
- Yes if you collect sales tax and don’t want to spend hours calculating your sales tax by using Amazon’s sales tax report.
Amazon’s Sales Tax Report
To view your Sales Tax Report, go to Reports -> Tax Document Library. If you aren’t collecting sales tax, your report won’t have any data in it. But if you are, you’ll get a hard-to-read spreadsheet.
Here’s a screenshot of what my Sales Tax Report for July 2016 looks like:
I know that the text in the above report is hard to read. 🙁
Here’s a different screenshot of the same report where Amazon shows you how much sales tax you collected and where you collected it from:
When I first started with sales tax, I tried sorting this report to calculate my sales tax amounts for each state. I couldn’t figure out how to do that and that’s the main reason why I use TaxJar.
How TaxJar Helps with Keeping Track of Your Filing Deadlines
When you log into your TaxJar account, you’ll see your Dashboard. This is where you’ll see your upcoming filing deadlines and how much you owe:
Granted, you can easily keep track of your filing deadlines in a calendar or spreadsheet.
But manually keeping a running total of what you owe to each state would be rather time-consuming.
How TaxJar Helps with Getting Your Numbers
When you’re ready to file your taxes, you click on the green “Sales Tax Report” button. Doing so will lead you to a page like this:
I’m showing you my Florida report because it’s one of my least favorite states to do. Besides needing to know your gross sales and how much you collected, you also need to know which counties you collected tax in. To make it worse, the counties have different surtax rates that you’ll need to keep track of.
My point here isn’t to go over Florida. Rather, it’s to show you how much easier it is to read TaxJar’s report than it is to read Amazon’s report.
How TaxJar Helps with Your Filings
TaxJar will file your returns for you if you sign up before their filing deadline and it costs $19.95 per state. To get started, you just need to click on the blue “Enroll in AutoFile” button.
I have always filed my returns manually. To get started with that, I just click on the “file manually” link which leads me to a page like this:
On this page, you’ll have links to the state’s website and general directions on filling out your return.
TaxJar: The Service That I Depend On the Most
For those of you that have been following my blog, you probably noticed that I tried (and cancelled) many Amazon FBA products and services. However, TaxJar is the only service that I’ve used for over two years and have no intention of cancelling.
I hope this post helps answer some of your sales tax questions. If you want to try out TaxJar, they have a no-risk, 30-day trial. Click Here to go to TaxJar and see if they’ll make your sales tax life easier too!
Affiliate Disclaimer: All links to TaxJar are my affiliate links. I thank you in advance for using them. There is no extra cost to you and any commission that I earn helps me maintain this blog.