Your eCommerce business must charge sales tax when you have nexus in a state. “Nexus” refers to a commercial connection in that state. States have different ways of judging whether you’re “doing business” in their borders, which is to say, they have different ways of defining nexus.

How do online stores handle sales tax?

The basic rule for collecting sales tax from online sales is: If your business has a physical presence, or “nexus”, in a state, you must collect applicable sales taxes from online customers in that state. If you do not have a physical presence, you generally do not have to collect sales tax for online sales.

What’s the difference between sales tax and ecommerce tax?

Let’s start with the basics of ecommerce taxes. Ecommerce tax refers to the sales tax associated with an online sale. Sales tax is a small percentage of a sale tacked on to that sale by an online retailer. Sales tax is a “consumption tax,” meaning that consumers only pay sales tax on taxable that items they buy at retail.

How to calculate sales tax for an online business?

The basic rule for online sellers when collecting sales tax is: 1 Your business has sales tax nexus in the same state as your customer. 2 The product is taxable in that state. More …

When do you need to collect sales tax from a customer?

Let’s look at when and from which customers online sellers need to collect an internet sales tax. The basic rule for online sellers when collecting sales tax is: Your business has sales tax nexus in the same state as your customer. The product is taxable in that state.

Do you have to pay sales tax when selling on the Internet?

The basic rule for online sellers when collecting sales tax is: Your business has sales tax nexus in the same state as your customer. The product is taxable in that state. Let’s explore these concepts a bit more in-depth.