Your online store is growing. Orders now ship to customers in dozens of states, you sell on your own website and on a marketplace, and someone in a founder forum warned that you might owe sales tax in states where you have never set foot. You are wondering whether you need to hire a tax accountant, or whether software and a few hours of reading will cover it.
The short answer: you do not always need a tax accountant to handle sales tax for an online business, but you do need someone to determine where you have sales tax obligations, because that decision drives everything else. Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, states can require remote sellers to collect sales tax based on their sales into the state, and thresholds and rules differ by state. Once registrations are set up correctly, sales tax software can handle much of the calculation and filing. A tax professional is most valuable at the start, when you cross new thresholds, and when something has been missed.
Why online sellers owe tax in states they have never visited
Before 2018, states generally could only require sellers with a physical presence to collect sales tax. In South Dakota v. Wayfair, the US Supreme Court upheld a South Dakota law that required remote sellers to collect tax based on economic activity in the state; the law at issue applied to sellers with more than $100,000 of sales into the state or 200 or more separate transactions. States then adopted their own “economic nexus” rules.
Thresholds vary. Texas, for example, says remote sellers with less than $500,000 of total Texas revenue in the preceding twelve months are not required to obtain a permit or collect use tax. Other states set different amounts and measurement periods, and some have changed their rules since 2018.
Marketplace sales change the picture
Most states now require marketplace facilitators, such as large online marketplaces, to collect and remit sales tax on sales they facilitate. Texas notes that a remote seller who only sells through a marketplace provider that certifies it collects and remits on the seller’s behalf is not required to hold a Texas permit, though records must still be kept. States differ on whether marketplace sales count toward your own threshold, which matters if you also sell through your own website.
What you can do yourself, and what needs a professional
| Task | Often DIY with software | Where a professional helps |
|---|---|---|
| Tracking sales by state | Yes, from your store and marketplace reports | Interpreting which sales count toward thresholds |
| Deciding where you must register | Possible for simple cases | Multi-channel sellers, physical presence from inventory or staff, past exposure |
| Product taxability | Standard goods | Clothing, food, supplements, digital products and software, which vary widely by state |
| Calculating and filing returns | Yes, with sales tax software | Setting up correctly and reviewing the first filings |
| Missed past obligations | No | Voluntary disclosure and exposure analysis |
Signs you should get professional help now
- You have exceeded thresholds in several states and have not registered.
- You store inventory in third-party warehouses in other states, which can create physical presence.
- You sell digital products, subscriptions or software.
- You have employees or contractors working in other states.
- A state has sent you a nexus questionnaire or notice.
A practical setup for a growing online seller
- Export 12 months of sales by state and channel.
- Have a qualified tax professional review where you have obligations and product taxability.
- Register in required states before collecting tax.
- Configure your store and sales tax software with the correct registrations and product categories.
- Reconcile tax collected to tax filed every month.
- Review thresholds quarterly as sales grow.
A hypothetical example: a skincare brand selling on its own site and a large marketplace discovers it has passed thresholds in several states through website sales alone. A tax adviser confirms which states apply, the brand registers, and ongoing filings move to software with monthly reconciliation handled by a bookkeeper.
Keeping sales tax clean depends on reliable books. For choosing that support, see online bookkeeping service or local bookkeeper.
Clean books that make sales tax manageable
Sales tax compliance is a decision for a qualified tax professional and a monthly discipline for your finance team. AB7 Solutions provides bookkeeping and finance support for e-commerce businesses, including sales reporting by state and channel, reconciliation of tax collected against filings, sales tax software setup support and marketplace data clean-up, working alongside your CPA or tax adviser for nexus and taxability decisions. We do not give tax opinions ourselves, and we will tell you when you need one.
Tell us which channels you sell through and roughly where your customers are, and we will help you get the data ready for your tax adviser.
Email: ab@ab7solutions.com | director@ab7solutions.com
Phone: +91 9878067778 | +1 321 341 7733
Website: www.ab7solutions.com
This article is general information, not tax advice. Sources: US Supreme Court, South Dakota v. Wayfair, Inc. (2018); Texas Comptroller, Remote sellers; Congressional Research Service, State sales and use tax nexus after Wayfair.