hey it's patti scharf CPA and co-founder of catching clouds the leader in
e-commerce accounting today we're going to talk about the big news of the week
and that is that the US Supreme Court made a ruling on the South Dakota versus
Wayfair case and these this has huge ramifications for online sellers and so
I'm going to bring in my other co-founder of catching clouds Scott
Scharf my husband also and he lives and breathes sales tax and he is going to
give you the whole rundown on sales tax and what this ruling means for you
hi um as you've probably heard cuz it's bidding in the news everywhere quill is
dead so Supreme Court ruled that quill no longer applies so what does that mean
well it's now the wild wild west of sales tax and what the states are gonna
be doing this means that the states can come up with their own laws and rules on
when businesses both in their state and outside of their state can't have to
register and collect sales tax Nexus and the rules on the books in the state's
now are whether you have physical Nexus you're physically there you have
property including your inventory sales sales reps traveling there or affiliates
and now the laws that they've added that if they've set thresholds for economic
Nexus or notice and reporting laws basically say if you have more than a
certain amount of revenue or a certain number of transactions then you have
Nexus in that state and the state can expect you to register and collect sales
tax in their state for all of the sales into that state now one of the things
you want to keep an eye on is the transaction limit more than the dollar
amount you go I was nowhere near a hundred thousand dollars in that state
but if your average sale price is $25 then you only need to sell $5000 in any
of these states in a year in the previous 12 months to have exceeded the
limit and had more than 200 transactions so keep in mind that that really it's
that 200 transaction limit now 25 states have these laws on the books now the
other states that don't have them will probably pass them quite quickly and
look at getting a cut of all of these funds of those states twelve of them
have a transaction threshold and three of them have revenue threshold of
$10,000 so of per year of income okay when you see these thresholds you want
to read the details or talk to a consultant because the the laws may not
have gone into effect yet they may not apply to you
based on your products there's a lot of nuances okay
now the interesting part about this is South Dakota you basically need to be
selling 1.8 million dollars of total revenue to be able to have hit that
threshold based on the population and how few people are in South Dakota so
they're one that started all of this and it really you've got to be almost a
two million dollar business before you have enough sales volume to have more
than two hundred sales in South Dakota so it's just one of those things so
these are the new rules that you have Nexus if you're an Amazon FBA seller you
have sales tax in excess in up to 26 States wherever Amazon storing your
inventory and then there are 11 of these new threshold Nexus reporting states
that that aren't FBA States that you need to be aware of so as an Amazon FBA
seller you might have to register and collect in 37 states really close to the
total of 45 to be fully compliant plus really any business over 20 million
dollars per year in revenue you really exceed that both the threshold and
transactions and the revenue volume and almost all of the states and that'll get
you pretty close to 45 states we really are heading to a world where where we're
collecting sales tax on all transactions everywhere that's just a matter of how
crazy the compliance is gonna be so how does that impact you take a look at your
own numbers download your sales total up the number of sales per or for the last
12 months and if you exceeded this transaction level then you have to
decide if you're gonna register and collect in those states what is it going
to cost you I don't know if you've added up the sales tax that you're already
doing or you're not doing in general that's gonna cost about $200 to get
registered per state between either your time and figuring out the details or
outsourcing it roughly paying $100 per registration and then both any signup
fees and state fees and other things it's about $200 per state for a safe
budget - just to get registered then safe budgetary number which you could
realistically pay is between 50 and $100 per state per month
yes 600 to 1200 dollars per year per state that could mean between 27 and 54
thousand dollars a year if you're registered on all 54 states are v all 45
states that have sales tax sorry too many states added up too many right
there so between outsourcing tools like tax gr
tax if I dealing with a salt sales and local tax expert notices fines fees late
penalties extra state fees that they don't tell you about until your second
year and all these other things you want to be able to budget and know you know
what the compliance is and then you've got to decide if the cost of compliance
and the risk of being audited or the fines for not complying with these
states if that risk is worth it up to you versus the cost but it could be a
significant percentage of your revenue in sales in that state and all your
margin on your sales in that state if you have a low dollar volume and low
margin products going into the states so those are things you really need to
consider all right so we know this is a lot I'm sure you've seen articles on the
news and and blogs and other YouTube videos and everything else what we're
trying to do is help out what we've done is the math for you so if you click on
the link below we've generated a spreadsheet that well that calculates
out either based on transaction or revenue based on the population which
we've seen over the last seven years really does apply pretty close as a good
initial indicator of how products are gonna sell across the country unless you
know your products really only sell well well into one state or the south or
beach states or whatever else so you have to look at your own data but we've
really done the math for you so please look at the link click the link down
below and we will share that spreadsheet with you you can put your own numbers in
and see how that adapts for you and save you the time of trying to figure out how
all this comes together anyway we wish you good luck we look
forward to seeing questions down below and take care
I hope you found this video helpful if you did please like comment and share
and I'll catch you later
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