Sales Tax Compliance for Multi State eCommerce Businesses A Guide for Amazon Shopify and Walmart Sellers

• 2025-05-19 18:10:46
• admin

As an ecommerce seller operating across multiple states and platforms like Amazon Shopify and Walmart understanding and managing sales tax compliance has become more complex than ever. The introduction of economic nexus laws and marketplace facilitator rules means online retailers are now responsible for complying with different tax obligations in each state where they do business.

This blog explains how sales tax works for multi state sellers the most common pitfalls and how OBG Outsourcing helps ecommerce businesses stay compliant and penalty free.

1 What is Sales Tax Nexus and Why It Matters

Sales tax nexus is the connection a business has with a state that creates a tax obligation. There are two main types

Physical nexus having a warehouse office employee or inventory in a state

Economic nexus triggered when your sales or transaction volume crosses a threshold usually one hundred thousand dollars in sales or two hundred transactions in a specific state

As an Amazon or Shopify seller you may have nexus in multiple states even without a physical presence.

2 Marketplace Facilitator Laws What They Cover

Most states now require marketplace facilitators like Amazon Walmart and Etsy to collect and remit sales tax on your behalf.

However marketplace facilitators only cover transactions processed directly through their platform. If you also sell through

Shopify your own website

eBay or Facebook Marketplace

Wholesale or direct business to business channels

Then you may still be responsible for collecting reporting and remitting sales tax in states where you have nexus.

3 Common Mistakes Made by Multi State eCommerce Sellers

Selling across platforms and states creates many compliance issues. Here are the most common mistakes

Assuming the marketplace collects and files all taxes

Not registering in states where economic nexus exists

Failing to update thresholds regularly

Overlooking taxability differences by product type

Missing due dates for monthly or quarterly filings

These errors can result in penalties interest and audits especially in states with strict enforcement policies.

4 How to Stay Compliant with Multi State Sales Tax

Follow these steps to ensure proper compliance

Step 1 Determine Where You Have Nexus
Track sales volume and number of transactions in each state
Identify inventory locations especially for Amazon FBA sellers

Step 2 Register for Sales Tax Permits
Register in each state where you have nexus before collecting sales tax
Maintain valid sales tax IDs for each state

Step 3 Collect Sales Tax Properly
Set up automated tax collection in Amazon Shopify and other platforms
Use tools like TaxJar Avalara or QuickBooks Sales Tax to manage rates

Step 4 File Sales Tax Returns
File returns monthly quarterly or annually based on each state's requirement
Ensure reports match actual collected amounts from platforms

Step 5 Maintain Clean Records
Keep reports registration documents and tax records for at least four to seven years

5 How OBG Outsourcing Helps You Stay Compliant

OBG Outsourcing offers specialized accounting and tax services for ecommerce sellers across the United States United Kingdom UAE and Australia. Here is how we simplify your sales tax compliance

Nexus Analysis
We review your sales data and identify where you need to register and collect tax

State Registration Support
We assist with state sales tax registration and documentation

Sales Tax Filing and Reporting
We prepare and file accurate returns across all registered states

Marketplace and Software Integration
We integrate Amazon Shopify Walmart TaxJar Avalara QuickBooks Xero and Zoho Books

Ongoing Compliance Monitoring
We update you with changes in tax rules and help maintain ongoing compliance

6 Conclusion

Managing multi state sales tax is one of the most complex parts of running an ecommerce business. With changing laws and platform specific responsibilities staying compliant without expert help is difficult.

OBG Outsourcing helps Amazon Shopify and Walmart sellers remain fully compliant. Our expert team handles nexus review tax registration accurate filings and monthly compliance so you can focus on growing your business.

Contact OBG Outsourcing today for expert help with your ecommerce tax management.

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