Sales tax

Do I charge Ohio sales tax to everyone that makes a purchase from my online store? I wasn't sure, I've heard so many things about sales tax. I know I charge it to everyone that purchases from me in my state. Although I'm selling online, isn't that the same as if the person came to Ohio to purchase from me. I mean if they come to my state to buy the jewelry, I'd charge sales tax. They're coming to my state in a sense when they buy from me online. I just don't want to end up in the red! I'm the sole owner of my small business. I have a business license only in Ohio.

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Permalink Reply by SUp.biz, CEO on June 24, 2008 at 6:47pm: Sales tax from online retailers is a hot topic. In February 2008, Gov. Eliot Spitzer launched a renewed effort to tax online purchases for the benefit of the State of New York. His campaign targeted Amazon.com, and would bring an estimated $47 million a year in additional tax revenues to New York. While the verdict on this is still out, the situation must be monitored by online retailers, as a precedent set in New York could open the floodgates for other states to seize the opportunity to collect more taxes.

Currently, in general, if you are an online retailer and you have a physical entity (a business office, a store, a warehouse, or any other brick-and-mortar structure) in a state, you will have to collect sales tax from customers in that state. However, you do not have to collect sales tax from customers out of that state. For example, if you have a storefront in Ohio in addition to your online presence, you will have to collect sales tax from your Ohio customers who purchase online, but not your Vermont customers. If you don’t have any physical presence in any state and operate solely online, you are able to sell your products online without collecting taxes.

Technically, customers who live in states with sales tax (all states except Alaska, Delaware, Montana, New Hampshire and Oregon) are obligated to pay the tax directly to the state. In this case, it’s called a “use tax” instead of a “sales tax” because the “user” is paying the state instead of the “seller.” That said, the online retailer is not obligated to collect the tax from those customers.

Armed with this knowledge and as a final measure, online retailers should call the state tax or revenue department in their home state (i.e., where you are doing business for sole proprietors, the state of formation for LLCs, the state of incorporation for corporations). You can call on an anonymous basis. Tell them what you are selling, whether or not you have a physical presence in that state, and ask them if there are any types of sales or other taxes that the retailer must collect on behalf of the customer.; ▶ Reply to This

Permalink Reply by kim on June 24, 2008 at 7:08pm: Thanks so much for this info! It makes since to me now.
Enjoy the rest of your day!

Kim; ▶ Reply to This

Permalink Reply by Gary A Wilson on July 1, 2008 at 4:07pm: Tax laws vary from state to state. In New Mexico I only charge tax when I sell instate. I don't charge sales tax online - unless they live in state. Out of state I charge shipping. I own a small business in NM but sell and advertise online (author/publisher); ▶ Reply to This