Sales Tax & Income Tax
Depending on where your store is based you will either need origin-based sales tax or destination-based sales tax. We recommend to determine if your home-base state is origin-based (charge at the rate of the vendor’s location) or destination-based (charge at the rate of the buyer’s location). It is required for you to collect sales tax from buyers and send it to the proper place either monthly, quarterly or, in some cases, annually. You will also likely need to pay self-employment tax on your profits, and in some locations, you may also be responsible for charging and collecting sales tax, a sales tax permit.
You will need to verify if your products are taxable. Most “tangible personal property” is taxable and even “necessities” may not be taxable in some locations. Check your state to determine if you should collect sales tax on your products.
- An identical product may be taxable in one state, and non-taxable in another state.
- A product may not be taxable at the state level, but may still be taxable at the local level.
- Be sure to set up your store to avoid collecting sales tax on non-taxable items.
For income tax, look up your state’s department of revenue or discussing state tax obligations with an accountant. If you have sales tax nexus in multiple states, that should be configured as well.
We’ve provided an overview/idea how sales tax work but please consult a professional for assistance.
How to collect sales tax?
Taxes are automated, we will collect sales tax at checkout based on your store address. At the moment, this service is provided for vendors with nexus in a single location. Once Vaishyamart has enough funds, we intend to not only collect sales tax but provide a reporting and filling for our vendors.