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Tax Tips: Everything You Need to Know About Sales Tax

Dec 6, 2010

by outright

Etsy.com handmade and vintage goods

Outright.com is back on the blog with straightforward tips on simplifying your accounting and putting the focus back on the creative. (Note: This info may only apply to U.S. sellers.)

When archaeologists dug out the ancient tombs of Egypt, they found marvelous artifacts like mummies and finely wrought jewelry; they also uncovered paintings of — no joke — sales tax collectors. It turns out that sales taxes on commodities such as cooking oil have been around ever since there were governing bodies to collect them.

These days, 45 U.S. states and the District of Columbia assess sales tax. If you’re an Etsy seller and you live in one of the states that require sales tax collection, this article will explain the fundamentals for you. For those who live in Alaska, Delaware, Montana, New Hampshire or Oregon ­— lucky you, you get a pass!

When Do I Collect Sales Tax?

Online sellers with “nexus” (legalese for “a physical presence” such as a store, office or employee) in a state or district with sales tax laws are required to collect on items sold and delivered within their state. In other words, if you run your business out of Virginia and someone from Virginia orders an item from you, then you are required to charge them sales tax. Sales tax rates levied by U.S. states are generally between 5-7%.

Sadly, you can’t just look up your state’s sales tax rate and call it a day. Cities, counties, municipalities, parishes and other smaller units within states are also able to levy sales tax, and according to the National Retail Federation, 7,500 jurisdictions (not including states) impose some kind of sales tax. These can run another 1-2% of the price of an item.

Note that most states allow you to collect sales tax at your local rate, not the local rate of the buyer. This means that you do not have to look up the local sales tax for every in-state buyer who makes a purchase from your store. So if you live in San Francisco, but sell to someone in San Jose, San Diego or San Jacinto, you can still charge sales tax at your local rate.

Some states though, like Washington, require sellers to charge buyers the buyer’s local tax rate. This means collecting very accurate address information and then figuring out the total amount of tax due based on where your buyer lives.

Fortunately, Etsy’s new Checkout process gives sellers a one-time, simple way to calculate and set up their sales tax collection down to the zip code. Just go to Sales Tax under Your Etsy and enter the rates for each U.S. state or zip code, Canadian province, or country where you would like to charge sales tax. When a shopper from that area buys from you, sales tax will automatically be charged. Find step-by-step instructions on setting up your Etsy sales tax collection in the Help section.

I’ve Collected All This Sales Tax. Now What?

It is your responsibility as an Etsy shop owner to report and remit the sales tax you’ve collected to the appropriate taxing authority. And every state collects in a different way. For instance, in California, state sales taxes are collected by the State Board of Equalization, which also issues mandatory sellers permits (required for sellers who sell tangible goods, such as Etsy sellers). To find out who administers sales tax in your state — and what you need to do to stay legal – find your state guide at Outright.

A note of caution: some sellers play it safe and collect just a little bit extra when it comes to things like shipping. (Etsy’s Sales Tax settings allow you to choose whether to apply tax to shipping and handling.) Resist the urge to collect extra sales tax! According to state law, any extra sales tax you collect belongs to them, too. Don’t ask us why — it’s the law. You’re doing yourself and your buyers a favor when you figure out sales tax right down to the nearest penny, and not a penny more.

And when this all feels a little overwhelming, just remember the basics: charge the right amount and keep track. You are participating in a tradition that is as old as the pyramids!

More Articles on Taxes

272 comments

  • BlueIrisJewelry

    BlueIrisJewelry said 5 years ago

    Very helpful--thank you!

  • MyCreativeSideKG

    MyCreativeSideKG said 5 years ago

    Good info! Thanks!!

  • brooksbarrow

    brooksbarrow said 5 years ago

    Good tips!

  • sweetjane

    sweetjane said 5 years ago

    Such a pain....thanks for the advice!

  • PlumeandPetals

    PlumeandPetals said 5 years ago

    Thanks for the info~!

  • MireilleLagow

    MireilleLagow said 5 years ago

    Great tips! Thanks!

  • myvintagecrush

    myvintagecrush said 5 years ago

    Love it! Thanks again, team Etsy!

  • birdie1

    birdie1 said 5 years ago

    Thanks! Etsy has makes it easy. Had one problem last week with a local buyer where sales tax should have been collected but wasn't. The buyer was sending item out of state as a gift - would that have anything to do with it?

  • karenjcreations

    karenjcreations said 5 years ago

    Good tips! Thanks:)

  • halfpintsalvage

    halfpintsalvage said 5 years ago

    Gonna get started on sales tax this morning. Thanks for the heads up!

  • cieliblu

    cieliblu said 5 years ago

    Thanks so much! What a huge help :)

  • MerCurios

    MerCurios said 5 years ago

    Great article. Unfortunately, NY State is not that simple. Here, sales tax is collected based on the persons zip code as there are many different rates within the state. The annoying factor is a small price to pay for doing business here. It gets easier & less intimidating as time goes by. Now, if only the sales tax due date was in line with the annual taxes - usually I'm scrambling at the last minute because I totally forget about it until about February.

  • BethanyOgle

    BethanyOgle said 5 years ago

    I'm really glad you wrote this article. When Etsy introduced the sales tax by zip code I thought I was doing something wrong. I didn't realize that some states charge the buyers tax rate. I have also shipped gifts out of state, and then later found out the buyer was local. I'd like to know the answer to Birdie1's question too.

  • abelabodycare

    abelabodycare said 5 years ago

    Helpful info. Thanks!

  • patchesnthings

    patchesnthings said 5 years ago

    Thank you so much for the information.

  • DalkullanJewelry

    DalkullanJewelry said 5 years ago

    Thanks for the help in dealing with collecting sales tax!

  • MarKhed

    MarKhed said 5 years ago

    taxes suck, but this makes them suck a little less. Thanks!

  • ohbabydotcom

    ohbabydotcom said 5 years ago

    Great tips!

  • 8thStreetSoap

    8thStreetSoap said 5 years ago

    Gah! Don't bother looking for a DC tax guide on Outright -- they don't include one. Disappointed.

  • LuvinEveryMinute

    LuvinEveryMinute said 5 years ago

    la la la la la (with my fingers in my ears) Smile. Thanks for the information.

  • SimpleJoysPaperie

    SimpleJoysPaperie said 5 years ago

    Thanks for the tax tips!

  • HeyDiddleBaby

    HeyDiddleBaby said 5 years ago

    Very helpful, thank you for the post! (and etsy tool)

  • BeatificBijoux

    BeatificBijoux said 5 years ago

    I always appreciate tax information. Reporting taxes is the most confusing aspect of the whole business to me.

  • paramountvintage

    paramountvintage said 5 years ago

    "fork it over" haha, so funny. thanks for this article!!! it is more than helpful!!!

  • Marvidrio

    Marvidrio said 5 years ago

    Thanks for posting this!! I can now let out a sigh of relief:)

  • Asianexpressions

    Asianexpressions said 5 years ago

    Thank you!

  • dayslonggone

    dayslonggone said 5 years ago

    Thanks for this information!

  • Prittyfy

    Prittyfy said 5 years ago

    Informative. Thanks a bunch.

  • happymaxdesigns

    happymaxdesigns said 5 years ago

    Thank you!!!

  • CositasSeriasVintage
  • cjrosejewelry

    cjrosejewelry said 5 years ago

    I can always use helpful tips with taxes! Thanks!

  • blueskyclouds

    blueskyclouds said 5 years ago

    Excellent!

  • engelpottery

    engelpottery said 5 years ago

    This has been very confusing for me. Thank you for the help!

  • dessertfirstdesigns

    dessertfirstdesigns said 5 years ago

    thanks for the info!

  • livelovemaria

    livelovemaria said 5 years ago

    The link "states that require sales tax" leads to an overview on the outright website, but from there when clicking on the "Wisconsin" link it leads to the Illinois link. I looked a bit at the address path and figured out it should link to this address: http://education.outright.com/wisconsin/wisconsin-business-taxes-and-license-permit-requirements/

  • oguerrero

    oguerrero said 5 years ago

    Thanks for the tip :)

  • lauraprill

    lauraprill said 5 years ago

    thanks for this post :)

  • weebit

    weebit said 5 years ago

    oh goodness, this is awesome! Thanks for providing this often overwhelming information in such an understandable format.

  • EverybodyElse

    EverybodyElse said 5 years ago

    Helpful stuff

  • ThreeBirdsJewelry

    ThreeBirdsJewelry said 5 years ago

    I was just starting to dread tax season since this is my first year selling...thanks for the helpful article!

  • nancynelsonjewelry

    nancynelsonjewelry said 5 years ago

    thanks for the tips:)

  • blueridgewoodworking

    blueridgewoodworking said 5 years ago

    thank you...I hope I don't get "killed"

  • LittleMunchkinShop

    LittleMunchkinShop said 5 years ago

    Lots of great info and tips!

  • doveandflower

    doveandflower said 5 years ago

    Very helpful, will definitely file this away till tax time. Thank you;-)

  • byrachelrose

    byrachelrose said 5 years ago

    Thank you so much for the advice. My only question is how can I set 2 rates for my state? I sell clothing and in my jurisdiction items $110 or less are exempt from city tax so I only have to charge state tax. I have some items over $110 and some under...what can I do?

  • TheLittleRagamuffin

    TheLittleRagamuffin said 5 years ago

    It is unfortunate that as of now NY State sellers can't set up the correct tax rates on Etsy as our tax rates vary by county and not zip code (many zip codes have more than one county within them). So the new sales tax setting based on zip codes won't work for us :( Etsy seller GoTo has some great info about NY Sales Tax posted on her blog: http://www.gotogreatpanes.com/blog/2008/01/17/new-york-sales-tax/ It's incredibly helpful!

  • ballandchain

    ballandchain said 5 years ago

    Yes, NY state taxes are by reporting code, can we please get this option? As we cannot use the zip code method. Pretty please? :)

  • DevineCollectible

    DevineCollectible said 5 years ago

    Yes, need to pay your tax! Peace out, DevineCollectible

  • backbaybeads

    backbaybeads said 5 years ago

    Great read and super helpful...Thank You!!!!

  • jaipuronline

    jaipuronline said 5 years ago

    I can always use helpful tips Thank's...

  • tiemee

    tiemee said 5 years ago

    Thank you for the reminder--I opt to do mine monthly because it is so fun!

  • NaturallyARKtistic

    NaturallyARKtistic said 5 years ago

    Thanks for the information! Very helpful!

  • NaturallyARKtistic

    NaturallyARKtistic said 5 years ago

    Thank you for the information! Very helpful!

  • BellaPuzzlesToo

    BellaPuzzlesToo said 5 years ago

    So glad I live in Oregon. :)

  • redemptionart

    redemptionart said 5 years ago

    Thank you...this helps

  • Barbiola

    Barbiola said 5 years ago

    Your insight into the actual business of running a shop is truly appreciated. Any further blogs on the nitty-gritty, nuts-and-bolts of financial and regulatory aspects of enterprise operation are more than welcomed!

  • reiddamnit

    reiddamnit said 5 years ago

    thanks for the information and links - so helpful!

  • bumblebooHandmades

    bumblebooHandmades said 5 years ago

    Thanks for the information! :)

  • bumblebooHandmades

    bumblebooHandmades said 5 years ago

    Thanks so much for the info!!

  • ikabags

    ikabags said 5 years ago

    Merci :)

  • outwardbound

    outwardbound said 5 years ago

    I have my shop set to collect sales for Georgia, but it never shows that it does.

  • EponaJewels

    EponaJewels said 5 years ago

    Thank you for the information!

  • SimplyMaco

    SimplyMaco said 5 years ago

    But no options to mark which items are taxable? In Pennsylvania, clothing and food are not taxable, but accessories are.

  • Carolineart

    Carolineart said 5 years ago

    Very useful. Thanks!

  • brookeelissa

    brookeelissa said 5 years ago

    Ah, taxes! My least favorite part of being an "artist". ha, ha! Thank you so much for the sales tax function! This came out the week I set up shop. Good timing! Now, to get to the bookkeeping . . . If only you had a function for that!

  • e5jewel

    e5jewel said 5 years ago

    I just made a purchase from an Etsy shop in my local area (GA) and was charged sales tax. I was wondering about that-thank you for clearing that up!

  • BabyJoeyStore

    BabyJoeyStore said 5 years ago

    I was just about to feel overwhelmed in figuring this out. Thank you so much.

  • LilahBelleVintage
  • Maddivadesigns

    Maddivadesigns said 5 years ago

    Lots of great info. Thank you!

  • Flipabill

    Flipabill said 5 years ago

    Thanks for the info, but speaking as a California seller, there are way too many zipcodes for us to enter on the etsy site. I do wish you had a solution for this. For now, customers will have to accept my higher sales tax rate or tell me where they want their purchase mailed to in advance, so I can set up a special zipcode connected sales tax for them.

  • RetroFirsts

    RetroFirsts said 5 years ago

    This came at the perfect time. Thanks!

  • pinkhouse

    pinkhouse said 5 years ago

    Thank you!

  • CraftedRoots

    CraftedRoots said 5 years ago

    Thanks so much!! A lot of good information all in one place! Who could ask for more? :)

  • BooksInspireMe
  • InkspotWorkshop

    InkspotWorkshop said 5 years ago

    But PayPal is already setup to charge my customers sales tax, why do I need to have Etsy collect it too?

  • allisonwilsonphotos

    allisonwilsonphotos said 5 years ago

    Thank you for the information!

  • wass1

    wass1 said 5 years ago

    TY for the info i didn't even know I had to charge sales tax!! I agree with Filabill living in California we have way to many zip codes.This is going to take some work. That is if I ever sale anything. It's only been a week though.

  • Lilywinkel

    Lilywinkel said 5 years ago

    I think I will move to Montana, Delaware, Oregon... I think I finally have figured out how Colorado tax works, now I just need to do some zip code research to find out what zips are in the same tax district as me. Thanks for this article!

  • Katexpressions

    Katexpressions said 5 years ago

    Thanks so much for providing information on each state and what they require. I really appreciate help on the business/legal side of things...

  • foxpots

    foxpots said 5 years ago

    Sellers should note that tax jurisdictions don't always line up with zip codes. For example, I live in a tax jurisdiction with a 6.5% sales tax rate. However, my location shares a zip code with another tax jurisdiction that has a 7% tax rate. I find it extremely irksome that most online retailers just go ahead and collect the higher rate. I end up paying more than I should, and my tax jurisdiction doesn't get their fair share of tax revenue. This is a very complex matter. Sellers need to be aware of their local tax laws and be careful not to oversimplify.

  • PetrinaCaseStudio

    PetrinaCaseStudio said 5 years ago

    Have been charging tax since I opened my shop. The biggest problem with New York State tax is they say I must add tax to shipping. I cannot get the Etsy button to do that. Etsy does not seem to charge tax on shipping. Tax form: TSB-M-92 (2)S

  • ASHWoodshops

    ASHWoodshops said 5 years ago

    Thanks for the information. It was very helpful. Blessings,

  • VintageHaven

    VintageHaven said 5 years ago

    I would like to see Etsy find a way to tax only the items I sell that are taxable (maybe check a box during the listing). I live in Mass and it is not an all or nothing situation. Some vintage items are taxed while others are not. No easy fix besides send a separate paypal invoice for taxes only for items that should be taxed when Mass buyers don't convo first. Any ideas from other sellers-convo me.

  • WhisperingOak

    WhisperingOak said 5 years ago

    Thank you Etsy for providing the information and great tips

  • jezebelle88

    jezebelle88 said 5 years ago

    I'm sooo lost. I don't understand why I need to add tax? Can I just sell an item for $10 bucks and that be it? Like a yard sale?? Someone help! :[

  • HappyFaceArt

    HappyFaceArt said 5 years ago

    It is good to know there is help when I need it. Thanks for. The information.

  • LumiereEtAlouette

    LumiereEtAlouette said 5 years ago

    I looked at that website that's supposed to tell us what the tax rates are, and it's organized all wrong. I clicked TN and it showed me Texas. Then I tried to look at the permits and business license requirements, and instead of TN, it showed me Virginia. Not to mention, I don't understand how I am supposed to know which places I should be collecting tax from, or what I'm supposed to do with it after it's been collected. If anyone wants to help me out, I would really appreciate it! I'm so lost! :(

  • northernskyquilts

    northernskyquilts said 5 years ago

    Thank you Etsy for walking us through the sales tax issue. I really appreciate all you do for us shop owners!!!!

  • Lutrick

    Lutrick said 5 years ago

    Needs to be fixed to help with NY and WA where it is charged weirdly. I'm in Wa and I have to charge where it is going, not where I am. Very annoying. If my website shopping cart can do this, why not Etsy?

  • FreshRetroGallery

    FreshRetroGallery said 5 years ago

    I like that you can download a csv file of "sold orders" with etsy, to help keep track of things, too.

  • EfiaFair

    EfiaFair said 5 years ago

    Thank you, thank you, thank you for this article. I feel so alone when trying to figure out complicated CA taxes ... great resource here. :)

  • Angelof2

    Angelof2 said 5 years ago

    We reside in state with over 27+ ever changing tax rates.

  • gracefuldesignscards

    gracefuldesignscards said 5 years ago

    Thanks for the reminder--I just went to set my sales tax for Virginia!

  • nenafashions

    nenafashions said 5 years ago

    Thanks for the info. Gotta keep Uncle Sam happy.

  • TheScrapBasket

    TheScrapBasket said 5 years ago

    Thanks for the info. It is very overwhelming, but all good stuff to know. Thanks for doing all the leg work!

  • anhartetsy

    anhartetsy said 5 years ago

    Sales Tax... its EVERYWHERE. I'm glad I now have a better understanding of how to collection and from whom. Thank you

  • LillyPinkPaperie

    LillyPinkPaperie said 5 years ago

    http://www.ehow.com/how_6591157_charge-tax-internet-sales.html http://www.allbusiness.com/sales/internet-e-commerce/2652-1.html Check out these articles. I appreciate Etsy's info on this... However, I think it's important to gather information from other resources as well. These web pages also have good links within.

  • evdesign

    evdesign said 5 years ago

    Thank you. That is some helpful advise.

  • EnglishTraditions

    EnglishTraditions said 5 years ago

    I've never seen Sales Tax explained so well in such simple terms - I teach business and our local CPAs refuse to comment on sales tax issues on the internet. GREAT article!

  • mbracestudios

    mbracestudios said 5 years ago

    You have saved me!

  • penyadesignshop2

    penyadesignshop2 said 5 years ago

    thank you for this!! because i was doing some crazy research and this article just made me feel like i was on the right track!!

  • NotYoMommasHandbag

    NotYoMommasHandbag said 5 years ago

    Very clear! now I understand....thank you....smiles

  • jaipuronline

    jaipuronline said 5 years ago

    I love this article....

  • GemdropsoftheFalls

    GemdropsoftheFalls said 5 years ago

    Tricky, but ya gotta do it. Thanks for the info.

  • artzygirl7

    artzygirl7 said 5 years ago

    Thanks so much. I live in New York and just found out about Amazon. No wonder I haven't heard back from them on their affiliate program. Much needed information. Thank you. I will get set up with Outright, as soon as I get my Etsy shop up and running. Joanne Merrick Johnson www.sculpturedlife.com

  • zrhardy

    zrhardy said 5 years ago

    So do you only have to collect taxes if you have a real shop outside of Etsy or if Etsy is your sole source of income? I am still a little confused and worried that I am doing the wrong thing . . .

  • NenasArtandDesigns

    NenasArtandDesigns said 5 years ago

    Thanks, I've added this one to my "favorites".

  • blufaerie

    blufaerie said 5 years ago

    Thank goodness... This was a very helpful article!

  • Seaweaver

    Seaweaver said 5 years ago

    Thank you so much for this article!

  • VeCeramics

    VeCeramics said 5 years ago

    Thanks!

  • texasnan

    texasnan said 5 years ago

    Very helpful information. Thanks so much!

  • JKLEncaustics

    JKLEncaustics said 5 years ago

    good to know

  • AlphaDogPhoto

    AlphaDogPhoto said 5 years ago

    Thanks for this article. I beieve I have been doing everything correctly, but am off to read more to make sure. "If you take a walk I'll tax your feet; if you try to sit I'll tax your seat..." It's that time of the year.

  • dazzleme12

    dazzleme12 said 5 years ago

    Very helpful. I signed up for Outright.. Etsy makes it easy to set up on line selling.

  • EssenceofTranquility

    EssenceofTranquility said 5 years ago

    Thank you for your Tips love and light Caz x

  • blankiesandtreasures

    blankiesandtreasures said 5 years ago

    thanks for the info...just now setting up my etsy account&need all the help I can get!

  • Gabsie

    Gabsie said 5 years ago

    I'm wondering how these things are in Europe, does anyone know?

  • lettersandthread

    lettersandthread said 5 years ago

    It says in the article that if you have a nexus, a physical store, then you need to charge sales tax when someone from your state orders from you. If I do NOT have a physical store, just an etsy site, am I required to charge sales tax or not? And if I do need to charge it, do I charge everyone or just those from my state? This article leads me to believe I don't need to charge any tax at all...but that sounds too easy. Can anyone clear this up? Thank you.

  • SterlingEchoes

    SterlingEchoes said 5 years ago

    great article full of much needed information - thank you so much!! I have been wondering how it will affect me living in Oregon and this was fantastic.

  • OliveandOwl

    OliveandOwl said 5 years ago

    Amazing that something so simple is actually so complicated. If only we could just barter!

  • whispersofnature

    whispersofnature said 5 years ago

    There are times when the business aspects of creating can put a bit of a dark cloud on my energy. Etsy's support, such as this posting, are a breath of fresh air. With much appreciation ~ Whispers of Nature

  • chini

    chini said 5 years ago

    Thanks for the GREAT support! ~Chini

  • puppydog35

    puppydog35 said 5 years ago

    Thanks I needed that infomation

  • EmelineW

    EmelineW said 5 years ago

    This was exactly what I needed to read! Thanks! This whole shop thing is a bit overwhelming...

  • JanieMarieDesigns

    JanieMarieDesigns said 5 years ago

    This is great to know since I have not sold anything yet I can start fresh.

  • PrairiePrimitives

    PrairiePrimitives said 5 years ago

    I've been selling my stuff for awhile and though I'm not an account nor attorney, I think I have a pretty good grasp of "tax stuff," both sales tax and income tax. I'm going to start at the bottom and work my way up to see if I can answer any questions. 99% of this comment is about sales tax, however there is a bit about federal income tax at the very bottom which applies to ALL U.S. businesses. (It looks like I got a little wordy because Etsy is telling me that I haven't typed anything yet, so I'm going to break this up into a couple of comments!) @lettersandthread, although the article used the word "nexus," the general idea is that (for states that have sales tax), you need to collect sales tax when you make a sale in a state where you have a physical presence. You live in your state, so you have a physical presence there so, if your state has a sales tax, you should be collecting it. If you go to the next state over (or across the country) to do a craft fair, you have a physical presence there for the duration of the craft fair and so you should be collecting sales tax on sales made at the craft fair. For sales where you are physically outside of your home state (such as an out-of-state craft fair), you would collect the tax based on the rate at the location where you are making the sale. Of course this also means you should have a seller's permit, tax license, or whatever it may be called for that location; most states offer temporary seller's permits to non-residents who only plan to sell in the state a few days each year. And you only collect sales tax for items shipped to a state where you have the authority to do so (i.e., where you hold a sales tax license, seller's permit, etc.). If one lives on or near a state border and does business on a regular basis in two (or more!) states, they should have sales tax permits in each state. In this case, you would collect sales tax on items you sell within each state (such as at craft fairs) as well as items which you sell online which are shipped to either (or any) of those states.

  • PrairiePrimitives

    PrairiePrimitives said 5 years ago

    @zrhardy, you should be collecting sales tax if you sell your handmade wares through any venue, whether that's online or at craft fairs or in a brick & mortar store. You'll need to have a seller's permit, sales tax license, or whatever your state may call it (they all have their own name for the document!); this is what entitles you to collect (and remit!) sales tax. @LumiereEtAlouette, see my above comments to see where and when you should be collecting sales tax. After it's collected, you remit it (turn it in) to the state where it was collected. If you do out-of-state craft fairs, as I mentioned above, you'll be turning in part of the tax to another state, so keep that in mind! I'm assuming that the Nashville you live in is Tennessee (there are Nashville's in other states too!). Here's more sales tax info specific to Tennessee: http://tn.gov/revenue/tntaxes/salesanduse.htm ... my experience (in Indiana and California) has been that the state will send you a sales tax return, however many states have done away with paper returns and are doing all of their sales tax collecting online. For small businesses that don't have a ton of sales, you will probably file your state sales tax annually. If you're a larger business (making hundreds of sales per month) or have a brick & mortar store, you may be required to file quarterly or even monthly. @jezebelle88, well, you can ... but you're not supposed to be doing it that way. As long as you're trying to make a profit (whether or not you do), you're considered a business ... and businesses have to collect sales tax. That's just the way it's done in the good ol' U.S. of A. @VintageHaven - SimplyMaco - RachelRose, does your state allow you to include sales tax in the selling price of the item? When I lived in Indiana (15+ years ago), that was forbidden however here in California, it seems to be acceptable. If you can include the sales tax on the items where you need to collect it, then just skip the Etsy sales tax thingy altogether! @wass1, I'm also in California and if we are supposed to be collecting sales tax based on zip code, I wasn't aware of it. So check with the BOE before you spend any time trying to set things up like that. Some states handle sales tax based on zip code, some by county or city (which is how CA seems to do it), and so on. @InkspotWorkshop, you don't. You shouldn't. That would be double taxation. As long as you're collecting sales tax one place or the other, that's all you need to do. Just be sure you're only collecting it for where you should be (states where you have a physical presence). @Flipabill, California sales tax isn't set up by zip code. It's by county (and occasionally city). Check the BOE web site for more info. A couple years ago, I blogged about setting up a small business in California; it's been a very popular article! Here's the link: http://prairieprimitivesfolkart.blogspot.com/2009/01/taxes-permits-licenses-for-new.html Now ... as for Federal Income Tax ... oh boy, that's a whole 'nother thing, and one that many people don't think about until sometime in April! However, as a business owner, you need to think about it prior to Dec. 31st because if you're showing a profit (especially a BIG profit), you may want to take steps to reduce that profit just a bit so you won't owe quite so much income tax to the feds. I got a little trapped by this situation back in 1994 when I had a VERRRRY good year (did a TON of wholesale that year). Early in December, I realized that I'd be showing a very healthy profit so I went out and bought a computer, printer, and software. Back in those days (the dark ages!), that cost me about $3,000 and even after writing all of that off as a business expense, I **still** had to pay Uncle Sam an additional $800, and another couple hundred dollars to the State. OUCH. Soooo ... today is 12/31, you've got another 12 to 14 hours to figure out if you're showing a profit that's going to be painful on April 15th. Happy New Year!

  • krugsecologic

    krugsecologic said 5 years ago

    I love my accountant - I don't understand any of it, so he handles it all :-) THANKFULLY !

  • JKLEncaustics

    JKLEncaustics said 5 years ago

    good to know!

  • DEBBIEMCOLUMBIA

    DEBBIEMCOLUMBIA said 5 years ago

    great info!!

  • CountingSunsets

    CountingSunsets said 5 years ago

    ahh, thanks for these links, i am new to selling so needed the info.!

  • gaelgallery

    gaelgallery said 5 years ago

    ok so how do i find out if my state wants me to only collect tax on buyers from my state only or all buyers?

  • ArtCycling

    ArtCycling said 5 years ago

    @gaelgallery I just read in an article that you collect sales tax on items that are shipped to a state where you live. My question is, if I'm in California and my friend who is going to sell things with me is in Indiana. All the money transactions are going through me...so does that mean I have to file her state sales taxes as well?

  • TheSnapDragonsLair

    TheSnapDragonsLair said 5 years ago

    Learning more every day. Thanks!

  • BluKatDesign

    BluKatDesign said 5 years ago

    How do I find all of the different tax rates; I can't even find a list of tall of the zip codes in WA state?

  • BluKatDesign

    BluKatDesign said 5 years ago

    How do I find all of the different tax rates; I can't even find a list of tall of the zip codes in WA state?

  • PeterDurand

    PeterDurand said 5 years ago

    I live in Washington state and pay my taxes online and have called the Department of Revenue a couple of times with questions. I was pleasantly surprised at how friendly and helpful they were. Here is a link to the information you need, http://dor.wa.gov/content/findtaxesandrates/salesandusetaxrates/lookupataxrate/ , Don't be shy about giving them a call.

  • shopmiko

    shopmiko said 5 years ago

    thank you for the helpful info!

  • NicolettesJewelry

    NicolettesJewelry said 4 years ago

    HI! is there somewhere in my shop stats or wherever that has a running total of the sales tax I have collected in 2011? As opposed to adding it up manually, one sale at a time... Thanks!

  • idoloveyou

    idoloveyou said 4 years ago

    Thanks for the info! You made especially easy because I'm based in Caliornia! I didn't realize you have to enter the rate for every state- geeeesh :/

  • skcumberland77

    skcumberland77 said 4 years ago

    So wait, if I am just making jewelry from my home (nothing big, everything is under $30) with no distinct office, store, or employee (nexus) am I required to file taxes as a business or just add it as extra income on my regular taxes? I will only have about 20 pieces total in my Etsy account.

  • skcumberland77

    skcumberland77 said 4 years ago

    Yeah I'm at a loss on dealing with Sales tax in WA... I wish Etsy's system would automatically assess the tax based on buyer. Now someone mentioned PayPal automatically adds the tax? Is that correct??

  • skcumberland77

    skcumberland77 said 4 years ago

    I am even more confused regarding license etc in WA...arrggghhh... I definitely make under 12k a year at this so do I have to have a license & collect taxes or what??

  • AcidTongued

    AcidTongued from AcidTongued said 4 years ago

    So to clarify, as long as I don't have a brick and mortar store or an employee I do not need to collect sales tax? I am in NJ if that helps. Thank you.

  • AuriesDesigns

    AuriesDesigns from AuriesDesigns said 4 years ago

    Just the info I was looking for. Thank you

  • MagellansBelly

    Carol from MagellansBellyStudio said 4 years ago

    Thanks for this post!

  • eclecticatd8

    eclecticatd8 from WhimsicalEncounters said 4 years ago

    Why would anyone collect sales tax on personal vintage items????? The person that bought them in the first place paid the tax a long time ago - I don't have a physical business anyplace - and I don't want one - I'm just selling out of my closet and my bureau - I'm really confused abou that - I thought 'store' was just an etsy terminology for one's selling site - tres confusion - help!!!

  • Segzylexi

    Alexi from FeatherAffair said 3 years ago

    I dont understand why sales tax would only be charged to people buying within my state. I work out of Truckee, CA...so if i ship to New York why wouldn't I charge them any sales tax?? Shouldn't they be charged my California sales tax since they are buying from California? I'm so confused!!

  • solarpaneljewelry

    Jonathan Hunt from solarpaneljewelry said 3 years ago

    The link to Outright for finding my state tax stuff no longer works. Is there an alternative place to look? Thanks!

  • 2craftygals

    Missy R from BroadwayFashion said 3 years ago

    Wouldn't it be easier to just not add sales tax? Sorry, confused here.

  • Silver15211

    Anna Alentyev from SilverBoutiqueOnEtsy said 3 years ago

    The links DO NOT WORK

  • conniculp

    conni culp from Creationsbyconni said 3 years ago

    I am so confused with all of this??? I am about ready to shut down my shop.. If I am not a business do I have to collect sales tax.. One mentioned above that if you do an art fair or whatever that you collect tax from where the fair is. I just went to an art fair and was not charged tax on anything I purchased.If I understand correctly she makes it sound like you only collect tax from ppl from where you live? is that for a business or someone like me just trying to sell stuff? Etsy is no help at all.I have sent 4 messages to them with no response at all. I was really excited about opening my shop and it has been a nightmare of confusing ever since I did it.. The search ads and all the other crap that follows. They make it sound so easy,list your stuff, open your shop and sell...not so simple!!!

  • etherealtiedyes

    Sean Hendricks from etherealtiedyes said 3 years ago

    How about adding a "set sales tax by county option". There are over 1000 zip codes in NC. They do not all have the same tax rate.

  • megan4847

    Megan Clancy from KeaneInspirations said 2 years ago

    FLORIDA SELLERS: Found this on the Florida Dept of revenue website, it was very helpful in determining how to remit taxes since Florida requires you to pay the discretionary sales tax to the county on top of the state sales tax. http://dor.myflorida.com/dor/training/nbo_new/safari3/index.html?dhtmlActivation=inplace

  • My Homepage said 2 years ago

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    Thank you! The outright link is not working unfortunately.

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