If you’re new to selling on Amazon, the process for calculating sales tax can feel pretty overwhelming. In reality it’s simpler than it looks - at least, it is once you know what you’re doing, and what tools you can use to help you.
How To Calculate Sales Tax If You Are Selling On Amazon
Take a look at your responsibilities on Amazon’s help page. They make it pretty clear that the burden to calculate and remit taxes is entirely on you.
If you’ve been selling for a while, you probably already know how much time calculating sales tax can take - especially if you ship worldwide.
Yes, there are guides out there that can help you. But this one from Sellerapp runs nearly 2,500 words, and this one from BigCommerce comes in around 2,100 words. They’re not exactly light reading. BigCommerce even states in their guide that:
"Sales tax for Amazon FBA sellers is a bit more complex than it is for most other retailers."
Don’t get discouraged. Start by asking whether or not your business is subject to Amazon sales tax.
Do I Have to Charge Amazon Sales Tax?
As a seller on Amazon, you have to charge US sales tax when you meet the following two criteria:
- Product taxability
- Sales tax nexus
If you’re an FBA seller, you’ve created a sales tax nexus in every U.S. state where you have inventory stored. You can see the details of these by clicking “Reports” > “Fulfillment.”
If you have an Amazon Professional Seller account, Amazon can collect sales tax on your behalf for a small fee. To set up this service you will need to log into your account and go to “Settings” and then “Tax Settings.”
Next, you’ll need to select the states that you want to configure tax settings for.
Select the state on the left and then add your tax registration number to the right, and then click “Save Settings.”
Although Amazon will now collect sales tax on your behalf, it’s still up to you to register with each state to file the appropriate paperwork and taxes.
For an easier and safer option, use a tool like Quaderno that calculates sales tax automatically on your behalf, in addition to automatically distributing receipts, credit notes and tax reports. Especially if you sell on multiple platforms, the time and effort you’ll save will be well worth the cost! Try the free trial now!
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.