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eCommerce Taxation in 2023 – What SMBs Need to Know

The taxation landscape for SMBs selling online is constantly changing. With new regulations and laws coming into effect, it is essential for eCommerce businesses to stay up-to-date with the latest rules. In this blog post, we’ll discuss the nuances of taxation for SMBs in 2023, as well as automated tax collection and remittance services that can help ease the burden of compliance.

No matter how automated your tax collection service may be, it is always wise to consult a tax professional when setting up your business' taxation system or making any changes down the line.

Tax Collection Requirements

In 2023, all US states require online sellers to collect taxes on sales made within their borders. This means that online sellers must be aware of each state’s requirements in order to comply with the law. Some states have adopted an origin-based approach, which requires online sellers to collect taxes based on their own location regardless of where the sale originated from. Other states have adopted a destination-based approach, which requires online sellers to collect taxes based on where the sale was made. It is important for SMBs to familiarize themselves with each state’s approach so they know exactly how much and where to collect taxes from customers.

Automated Tax Collection and Remittance Services

Fortunately, there are automated services that can help streamline the process of collecting and remitting taxes for eCommerce businesses. These services can help make sure that taxes are collected accurately from each customer, as well as ensure that payments are sent to the appropriate authorities on time. These services also provide analytics and reporting tools so businesses can easily monitor their compliance efforts over time. Automated tax collection and remittance services are often tailored specifically for SMBs and can be especially helpful if you don’t have a dedicated team dedicated solely to managing your taxes.

Consulting a Tax Professional

No matter how automated your tax collection service may be, it is always wise to consult a tax professional when setting up your business’ taxation system or making any changes down the line. A knowledgeable tax professional will be able to provide insight into complex legal issues related to taxation rules in different states as well as advise you on best practices when it comes to collecting and remitting taxes correctly. Doing so will help you avoid costly mistakes or penalties down the road.

Conclusion

Taxes are an unavoidable part of running any eCommerce business in 2023—no matter what size or shape your business takes—so it’s important that you understand all relevant taxation rules before launching your business or expanding its reach across multiple states or jurisdictions. Automated tax collection services can make it easier but should still be supplemented by consulting a qualified tax professional who can guide you through more complex issues such as multi-state taxation rules or other nuances specific to your situation. By taking these steps now, you’ll save yourself headaches down the line!

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Brandon

Brandon was born in the early 1980s with two vocational-type passions starting at a young age - selling great products and tinkering with technology. In the late 1990s, he started diving into web technologies and web design. eCommerce is the perfect marriage of his two vocational passions, and it is taking the retail world by storm. Fast forward to now and Brandon has had the pleasure of working with many SMBs and startup companies across different industries from software, outdoor apparel and accessories, footwear, high fashion jewelry, pet products, interior design, hospitality, real estate, agriculture, home improvement, recreational vehicles, direct sales, and more transacting over $50M with his clients as a result of his work. He founded Peak Digital Marketing Solutions, LLC in 2022 to help clients develop practical systems and programs and elevate SMBs in the eCommerce space using a holistic approach.

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