Selling an online course is a great way to capitalize on your knowledge and expertise, while also expanding recognition for your brand and helping you build a pool of engaged customers who will buy from you again and again.
But one place where online course providers have lagged behind other eCommerce platforms and shopping cart systems is the management and collection of sales tax. If you want to stay compliant, you’ll need to use a third-party provider like Quaderno.
Is My Online Course Taxable?
The short answer? Probably.
The longer answer is that a number of different factors are used to determine whether your course is taxable - and these factors vary from state to state. As an example, in the 24 states that are covered by the Streamlined Sales and Use Tax Agreement (SSUTA), courses are generally considered to not be taxable if:
- The course is delivered in real-time, versus being pre-recorded
- Participants are able to engage directly with one another during the course
- Actual evaluation by an instructor takes place, versus automated scoring or evaluations
Course providers that meet just one of these conditions are usually exempt from sales tax. However, this doesn’t reflect the additional complexity that comes from states charging different tax rates or the issue of sales tax nexus, which affects who needs to file sales taxes in the first place.
Charging Tax Through Thinkific
Let’s assume that, as a course provider, you do need to charge sales tax. Even though you put a ton of effort into figuring that out in the first place, you’ve got another challenge ahead of you: Thinkific doesn’t have a mechanism for billing sales tax.
Instead, Thinkific recommends either building an additional tax cost into your course pricing or working with a provider like Quaderno.
Simply increasing prices to compensate for taxes you’ll need to pay might sound like the easier solution, but doing so means you’ll raise rates for everyone - even those buyers you wouldn’t have had to pay tax for in the first place. Increasing your course costs could cause sales to slow by putting your offering out of reach for some buyers.
Fortunately, integrating Thinkific with Quaderno is easy, thanks to step-by-step instructions that’ll walk you through exactly how to tie the two systems together.
As long as you’re on a Startup plan or higher, you’ll be able to walk through the process once, and then never worry about sales tax collection and compliance again!
Not yet a Quaderno customer? Sign up for your free trial to see how easy sales tax compliance can be for online course providers.
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.