Compliance and E-commerce Business
When you first began your e-commerce business your concerns quickly grew from “what do I sell? How do I sell?” to being aware of federal and state regulations that included:
- Shopping cart regulations
- Pricing regulations and competitive analysis
- Income tax issues
- Sales tax issues
- Non-taxed transaction compliance
And much, much more.
In order to manage your large spreadsheet of products and ensure your shopping cart complies with appropriate standards, you selected a respected, knowledgeable and well-referenced shopping cart vendor: 3DCart.
To handle income and cash flow, you probably selected an Enterprise Resource Planning software or financial application that could be integrated with your shopping cart.
But how much thought have you given to sales tax? Did you know that states are increasing their scrutiny of e-commerce businesses in an effort to enforce existing sales tax laws and increase revenue through catching businesses that are not compliant?
Currently, laws are being considered to increase nexus of e-commerce businesses. This means your business may become liable to collect and remit sales taxes in more jurisdictions and more states than you have previously.
Sales tax compliance is complex. There are three important factors to sales tax compliance:
- Accurate sales tax calculation;
- Appropriate documentation for non-taxed transactions; and
- Timely filing and remittance of sales tax liabilities in all jurisdictions where you are liable.
Tax Calculation Is More Than Just a Zip Code and Calculator
Some businesses still think that a basic calculator and a zip code provides them with an accurate sales tax rate. Unfortunately, any given zip code could actually contain 5 or 6 tax rates depending on the address of the recipient. In addition, states have different rules on the taxability of products. One example is clothing and food—many states have unique rules that determine whether an item is taxable at a reduced rate or at the regular sales tax rate or not at all.
Non-Taxed Transaction Documentation
Did you know that recently a Florida school board was rejected in their appeal to not have to pay sales tax on items used to re-roof the school building? Why? Because they had not provided the seller of the product a valid exemption certificate to qualify their purchase as tax exempt. Even e-commerce businesses must provide proof when they are allowing a tax-exempt customer to purchase normally taxed products tax-free. It is the law in most states that the seller is responsible to ensure they collect and retain a valid copy of a customer exemption certificate for the non-taxed transactions that customer makes.
Filing and Remittance—It’s All About Time
When a business files on-time, they reduce their risk of exposure to audits. A business that is historically late filing and remitting sales tax increases attention from the state. Filing and remittance errors and slow responses to notices also cause a state entity to pause and consider auditing an e-commerce business.
Avalara is the technological leader in delivering sales tax compliance. Easily integrated into your ERP/financial application and your 3DCart shopping cart, Avalara’s AvaTax ensures accurate sales tax calculations “down to the rooftop,” easy collection and management of customer exemption certificates from within your e-commerce shopping cart—real-time, during the transaction―and timely, responsive filing and remittance services.
Learn more about AvaTax today. Call 877.780.4848 (206-826-4900) or visit www.avalara.com.