Launching an e-commerce shop can provide additional sales opportunities to an independent gourmet store. However, when it comes to online shopping, there are sales tax rules — in this case murky online sales tax rules that vary from state to state — to be dealt with.
“Online sales taxes has been a point of contention of many brick and mortars that feel they are at a competitive disadvantage against the online seller who does not have to collect sales tax,” explained Josh Stack, vp/purchasing for Lafayette, IN-based J.L. Hufford.
“Current tax law states that a substantial tax nexus is defined by a retailer having a physical presence in a state. This means that a seller in Indiana can ship to a customer in New York without having to remit taxes to New York’s state revenue agency,” he explained.
However, he cautioned, within the next two to three years, this is going to change and could potentially cost small business owners thousands in additional administrative costs.
To help navigate these impending changes, Stack provided a few resources and tips for independent gourmet retailers as they navigate their online sales tax process.
There are several software programs that can help an independent retailer manage its online sales tax protocols. Taxify, TaxJar and Avalara Trustfile, to name a few. However, each has its own litany of costs and it is important to calculate the cost of your time or your staff’s time to manage the sales tax process.
There is always this assumption that technology is virtually free, and can make this complex process easy to manage. Don’t forget time spent. It takes time to manage all of the data, as well as documenting what has been done even with technology. Time is the most valuable resource for every entrepreneur. The time spent on this means you and/or your employees aren’t finding new products, driving more revenue or spending time with your family.
If managing online sales tax is a distraction or too complex to be tackled in-house, consider outsourcing. Catching Clouds, Ampersand Accounting or Windward Tax all offer a variety of services and, typically, these experts are using and paying for the same DIY software tools (with a small discount). However, once labor and expertise are added into the pricetag, on top of that, the expense gets higher.
Even stores who are exclusively brick and mortar but desire an online presence could be affected by the impending changes, so it is important for business owners to speak with their local state legislators. Making your voice heard can help legislators better understand the enormity of the changes that independent retailers face if future laws are too complex.