Tax Tips for Selling Resources on Your Website

Kirsten 0:00

Hello, and welcome to a bonus episode of the creative teacher podcast. This is a continuation of what we talked about with Emily Bryant earlier this week, except shifting from income tax to sales tax, I decided to ask her just a little bit about if TPT sellers were wanting to diversify and sell off the marketplaces like TPT or Etsy and they might want to sell on their own website like WooCommerce or with Shopify. And I asked her a couple of questions as far as best practices for collecting sales tax should taxes even be collected on your website, and how that process works. So we have a bonus episode with her answers.

And hopefully you're going to get some great insight on having taxes and dealing with sales taxes on your store website. There's still so much to be covered. Because I know like one of the main things or things that people are talking about right now is selling on their website. And I guess I mean, I'm just gonna ask them to you're here. But as far as, like, there's something called Nexus where certain, you know, there's it depends on the state you're in, of course, every state is different, some are similar. But if somebody's on TPT, you know, they have a TPT store and they want to sell their products on their website, like through WooCommerce or Shopify or something like that. What are some best ways to like legally, you know, still be okay with collecting taxes and trying to figure out, you know, with all the different states how that would work? Or would it just be best to just do it all, like tax free? What are your thoughts on that?

Emily 2:51

Well, tax free is probably not the way to go. So what we're talking about right now that we've ventured, so we have been talking about income tax, and you're now venturing into sales tax, which is a different tax, and it's different taxing agency. So the IRS is not involved in sales tax. This is a state by state Department of Revenue, right? Sort of discussion here. And Nexus is there are two types of Nexus. So trying to figure out do Are you do you have to pay sales tax in what state? Like? That's kind of your question. Right, right. And to answer that there are two you got to look at two things. One, do you have physical Nexus and there's the other one is economic Nexus. But let's start with the physical one, because that's the easiest. So physical Nexus, where are you located? I am in Georgia. I sell digital projects it products in Georgia. I am here I have physical nexus in Georgia. I would then have to go look at Georgia's laws to see is what I'm selling taxable? Like for sales tax. And you would go look and you'd be like, ah, digital downloads are not taxable. Awesome. Always. So but if I sold something physical and shipped it now I have sales tax.

Kirsten 4:13

Gotcha.

Emily 4:14

However, I have employees in South Carolina. I have one in Florida and I have one in Texas and one in Michigan. And so I have to go look every one of those states to see what their laws are because I have a physical Nexus my business has dealings. Like with that, if you have a drop shipper, so if you are creating boxes and you're selling I don't know these like school boxes or something and you have a drop shipper. I think I had one like where they're in Texas or something and that you just like processing order they create the order and ship the order for you. You don't have to do anything. Right. That creates physical Nexus. If you have a contractor in a different state that has created physical Nexus So you have to go through the same process, you got to go look, it is my things that I sell their taxable. So all of that, do you recommend like, do you really frustrating?

Kirsten 5:12

I know Yes. Oh, gosh,

Emily 5:13

right can be frustrating. Okay, now,

Kirsten 5:15

why can't we all do like everybody on the same page? But of course, it's not like that. So, no,

Emily 5:20

because there's, you know, 50 states. And so once you've gone through that exercise, you now have to look at Part Two is do you have economic Nexus, which is, and this one gets more complicated, and where, you know, I don't really touch sales tax a whole lot, because I try to keep it away from it, because it's a huge pain in the butt because of this economic Nexus, which is, have you sold so there are basically if you sell has it two years ago, now, there was a Supreme Court ruling that got overturned, it was Wayfair. And something I think, which basically means that every state can now tax you on anything you sell in their state. Oh, however, that's like a monstrosity, right? You know, the digital space of selling easily, you know, the E commerce space. So they have installed or instilled a thresholds. Now, generally speaking, they have all sort of by now, even down to roughly the same amounts, just try to make it easier, but you still have to like, look at all of them. I just I ran into a another TPT accountant, I can't remember her name right now shoot. She had a little mini course on sales tax and kind of explained this and has a spreadsheet about what these thresholds are. Now typically, it's about you have to sell $100,000 in that state, and but sometimes or 200 products. Hmm, so as a TPT. Seller, it's sometimes it can be easy to like, hit that 200 product mark, but like, you're not hitting $100,000 In that one state mark. Right. So you wouldn't have to worry about it. Oh, so it's just like, it's, it's complicated. Now, for the most part, like depending on how much you sell, and I have some sellers that sell like, a lot. And but mostly the sellers that I kind of talked to is they are not going to meet that economic threshold. And if they did, like if the if there were because at one point, Kansas was like one of the only ones was like, you sell anything, you owe us money. And I was like, okay, don't worry about it, because of Kansas wants to come after you for the $2 that you owe them for sales tax. Sure, here, yeah, here. Because you will spend more money trying to figure it out than just like them, discovering it, figuring it out, and you just like, go, here's your penalty, it was way cheaper than hiring an accountant. Right? Hmm.

Kirsten 8:04

Interesting. And then do you recommend any tools to like, keep track of all of that if you were to, like sell separately outside of TPT?

Emily 8:13

Um, yeah, so there is, it's actually like, it's even with CPT is really frustrating. So there are tax jar, and Avalara are the two big like two kind of main main apps in that space. The thing with TPT is so there they are what is considered a marketplace facilitator. So CPT file sales tax on your behalf. If you sell on Etsy, it's the same thing through a marketplace facilitator, Amazon, same thing. So you don't have to worry about sales tax if you're selling on those platforms. But if you're selling using Shopify, on your website with WooCommerce, you have to worry about this. But some states, you are required to report all of your sales, back that out on what like was sold, like all sales, and when I say all sales, I mean, including TPT. But TBT doesn't give you enough information to be able to do that. Really frustrating. So you do the best you can. Yeah. And you try to make sure that you're paying the tax that you're supposed to be paying. And so you file it as here are the taxable sales that I'm responsible for. Okay. So until TBT kind of, you know, catches up there. I talked to them at the conference, but yeah, it'll be a well, yeah, well,

Kirsten 9:37

still good to know. Thank you for those bonus like nuggets for as far as sales tax. I know most of what we're talking about today is income tax. But still, I appreciate that bonus tips because I know I'm sure a lot of people had questions on that as well. So

Thanks for tuning in to the creative teacher podcast. If you enjoyed listening to today's episode, feel free to subscribe and leave a review. I'd love to hear your feedback. You can also find me on Instagram at the southern teach. I cannot wait for you to join me in the next episode for more tips and inspiration. Have an amazing day.