Net Profits: Jewelry Business Sales Tax Primer for Jewelry Artists
If for your jewelry business you sell your jewelry from a brick-and-mortar store or from your home studio to friends and family, there’s only one kind of sales tax you need to worry about: the one that applies to the location where you live and work. Once you start to sell on the road or online to customers in other locations, sales tax can get tricky.
One thing is certain. If you have a physical presence in one or more of the 45 states that levy a sales tax, you are required to collect sales tax. Since each state can make its own laws about taxes, what constitutes a physical presence will vary from state to state.
If you sell your jewelry online, things can get really complicated. “Most states are destination-based, when it comes to selling online,” says Jennifer Dunn of TaxJar. “They consider the point of sale to be where you deliver the item.”
If you use Shopify, Square, or the WordPress plugin WooCommerce for ecommerce, you already have one of those tools working for you: TaxJar. An online sales tax filing service, TaxJar is built in to all three of those platforms to help merchants aggregate sales information across multiple channels, automate the reporting/filing process, and allow for automatic adjustment of sales tax rates based on location.
Each of those platforms offers detailed information for how to deal with sales tax, both domestically and overseas. It’s a bit more laissez faire on Etsy, but they too offer sales tax guidance.
If you have a sales tax “nexus” in a state — meaning you yourself live and work there or someone you partner with does — you need to apply for a sales tax permit and collect sales tax on all sales to customers in that state.
When you apply for this permit, the state will tell you when and how to remit the sales tax you collect back to them. Some states require you to collect sales tax on shipping as well. Be sure to check with your State’s Department of Revenue. Here’s a map that lets you click on each state to find out the sales tax rules that govern it.
The amount of sales tax you must collect varies by state and locality. Twenty-eight states require you to collect sales tax based on where your customer lives. Each state also has its own rules for filing and paying sales tax. You may have to file sales tax annually, quarterly, or monthly, based on your sales or the amount of sales tax you collect. Some states require you to file online, others will take a paper return. Most require you to file, even if you have no sales tax to remit.
Come up with a system for tracking sales tax that works for you, but don’t forget to file! Forgetting can lead to fines, and who needs that?
NET PROFITS is a regular feature about using the Internet for jewelry selling of special interest to those with a home-based jewelry business that appears in Lapidary Journal Jewelry Artist. Learn more in “Tax Tips for the Traveling Jewelry Artist” in the March 2017 issue.
CATHLEEN MCCARTHY has written about jewelry and business for Town & Country, Art & Antiques, Washington Post, and her own site, The Jewelry Loupe. Follow her on Facebook, Instagram, Twitter and Pinterest.
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