eCommerce

If you are unfamiliar with online businesses, you may find Getting Started with the Internet helpful.

DropShippers and licenses and permits

You should work with your coach to verify if this information is accurate for your business. If your suppliers tell you that you need a resellers permit, then some of this information may be helpful. We are not involved with eCommerce internet online business coaching and have only provided this information as a starting point until you have a chance to get guidance from your coach.

Be aware that your business activity will usually require multiple licenses and permits depending upon the city, county and state that you live in. Please call the state department and your local county / city departments responsible for issuing licenses and permits and collecting taxes for details. If you live in Canada, you should check with your local tax authorities to determine if you need to obtain an HST / GST number.

If you have a Delaware company, there are no state or local sales taxes in Delaware and as such, sales tax exemption certificates and reseller certificates are not applicable to Delaware. See http://revenue.delaware.gov/services/Business_Tax/Exemptions.shtml. For an overview of the approach Delaware is taking towards online businesses, read more here. Contact the state of Delaware for further information.

Most states require a sales tax permit only if you have a physical presence (sales rep, store, warehouse, etc.) in that state.

Nevada requires a State Business License for your Nevada LLC. It is part of the Minute Book that we send you and is not the same as a reseller’s permit.

Click here for more details if you do not live in Nevada and have a Nevada LLC.

If you live in Nevada, you can contact the State of Nevada Department of Taxation at 866-962-3707 for details on the state sales and use tax license.

Listen to a short audio clip with Wendy Byford and Warren Taryle where they discuss some of the complexities of Sales and Use Taxes and permits / licenses. This may help you when you are discussing permits with your coach or accountant.

Drop shippers and taxes

 

Sales tax and resales permits

 

If required by suppliers and drop shippers, the Canadian equivalent of these America licenses would be GST/HST/QST. Please contact Revenue Canada for details.

NAICS code

A common question that is asked by people getting a “reseller’s permit” from their state department of revenue / taxation is “What is my SIC or NAICS code?”. You can search for the NAICS code for your business type here. We have found that the code 454111 is appropriate for some types of internet sales, so please verify your particular business activity. The NAICS code should reflect your business activity. If you are not sure what the code for your business should be, contact your internet business coach.

You are responsible to monitor the changes to state laws – contact a financial professional to be sure. States change their tax rules without warning, and you are responsible for keeping up-to-date.

NEWS. You may have heard about the “Amazon Tax” and the effect it is having on affiliates, drop shippers and entrepreneurs. Here is a link to a discussion of the impact on your state. Talk to your coach about any changes you need to make to your on-line strategy.

UPDATE
9 Nov 2011 A Senate bill introduced today has reignited a long-simmering debate over whether Americans should be required to pay Internet sales taxes when they go shopping online.

2 Feb 2012 USA Today says Momentum growing for sales taxes on online purchases

4 Feb 2013 Connecticut residents will pay sales tax on Amazon orders starting in November

Foreign Registration

If your LLC is not registered in your home state, then you will need to obtain a “certificate of existence” or a “certificate of authority” or a “certificate of good standing” and a “foreign registration” to have your out-of-state LLC registered in your home state in order to obtain a sales tax permit in your home state.

Obtain a Short Form Certificate of Good Standing from the State of Delaware. This document will be required by Massachusetts as evidence that your Delaware LLC actually exists. The web page with the link to apply for the Certificate is http://corp.delaware.gov/certmemo.pdf. Use the Company name and Delaware Certificate of Formation File Number located in the upper right corner of the Formation document where the form asks for “Certification Request Information”. Select the “Short Form Good Standing” Certificate.

Obtain a Certificate of Good Standing from the State of Nevada. This document will be required by your state as evidence that your Nevada LLC actually exists. The web page with the link to apply for the Certificate is http://www.nvsos.gov/index.aspx?page=4 and the link takes you through a series of pages to register for an account with Nevada and to order the certificate. The certificate is placed in your Nevada account under the heading Job History, and usually becomes available after 30 minutes or so, so just keep checking the web site until the document is available.

States only issue permits for companies that are registered in that state. This ties into a point about bank accounts. If you are going to have to get a foreign registration for your sales permit in your home state, then you can also use that same foreign registration to open a bank account with a local bank or credit union.

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