Just like brick and mortar stores, E-Commerce sellers have to collect and pay sales tax.
First, determine whether the products you’re selling are taxable. There are items such as clothing, grocery food, footwear, prescription medication and medical devices, that are tax-exempt in many states.
Next, find out which are the states that your business has a nexus in. Having “nexus” in a state often means you’ve a physical business location sited in that particular state. As an online seller, even if you do not have a physical presence of business in a state, you’ve to pay applicable sale tax if you’ve established an economic nexus in the state. For instance, for the state of South Dakota, once you’ve made sales of more than $100,000 in a previous or current year, you’re said to have created an economic nexus in the state.
Then, apply for a sales tax permit in that state.
Once the approval of the sales tax permits has been granted, you can begin collecting sales tax.
Finally, report, file and remit the sales taxes you’ve collected.