As of 2023, states use "economic nexus" rules. This means if you sell to customers in a state and exceed a sales threshold (typically $100,000 or 200 transactions annually), you must collect and remit sales tax, regardless of whether you have a physical location there. This applies to Etsy, Shopify, Amazon, and other platforms.
Key Sales Tax Concepts
Economic Nexus
Economic nexus means you have a "presence" in a state for tax purposes based on your sales volume, not physical location. Most states require you to register and collect sales tax if you have more than $100,000 in annual sales or 200+ transactions to that state.
Sales Tax Nexus by State
Every state has different rules and thresholds. Some states have lower thresholds or require immediate registration. As a seller across multiple states, you need to track:
- Which states require you to collect sales tax
- The sales threshold in each state
- When to register for a sales tax permit
- Your filing frequency (monthly, quarterly, or annually)
- How much tax you've collected from each state
Platform-Remitted Sales Tax
Some platforms (like Amazon, Shopify, Etsy, Creative Market) automatically collect and remit sales tax on your behalf. Others don't. You need to know which platforms are handling tax collection and which require you to manage it yourself. Creator Ledger helps you track this by platform.
When to Collect Sales Tax
Generally, you must collect sales tax from customers in states where you have economic nexus. However, some states exempt certain products:
- Digital products may not be taxable
- Some services are exempt
- Resale certificates let wholesale customers avoid sales tax
- Some states have special rules for shipping
Sales Tax Obligation Checklist
- ☐ Track gross sales by state monthly
- ☐ Monitor economic nexus thresholds
- ☐ Register for sales tax permits when threshold is reached
- ☐ Understand each state's tax rate and rules
- ☐ Determine if platforms are remitting on your behalf
- ☐ File sales tax returns on schedule
- ☐ Keep detailed records of all sales
The Studio plan includes built-in sales tax tracking that helps you:
- • Track sales by state automatically
- • Identify when you've reached economic nexus thresholds
- • See platform-remitted vs. self-remitted tax breakdown
- • Export sales tax reports by state for filing
- • Stay compliant across multiple platforms