Since publishing my post on “Dealing with Tax and Bank Settings,” I’ve received a large number of responses with further questions on both tax and banking. Let’s address tax first. Let me start by answering a couple of common questions:
Q: Do I need a tax ID?
A: If you are selling on Amazon in the US, you will need to pay sales tax. In order to register with states/territories to collect sales tax from your customer, you will require a tax ID. In order to file your sales tax return, you will require a tax ID. So in short, I’d say yes, you need one.
Q: What states/territories do I need to pay sales tax in?
A: You will need to pay sales tax for any sales made to customers within states in which you hold a Nexus. What’s a nexus, I hear you ask…. Well, a nexus is a presence in any state/territory. For our typical case of an entity set up outside the US with stock sitting in a FBA warehouse, you are considered to have a nexus in any state in which your product sits in a FBA warehouse. Given this situation, you will need to register for and pay sales tax to any state in which a FBA warehouse holds your product.
Getting a Tax ID
So first step is to get a tax ID. I know from experience that the process of identifying and applying for the required tax ID can be painful due to the lack of clear information available. I have simplified the process by putting together a “Tax ID – Cheat Sheet”. The Cheat Sheet is a detailed walk-through to obtain a tax ID.
This Tax ID – Cheat Sheet is available as a premium post. You can check it out here
Disclosure: I am not a tax advisor and the information provided is only a reflection of what I’ve learnt from my personal experience. Please do your own research and fully understand your obligations before making any decisions.