Businesses selling across state lines can have a lot of benefits. With proper preparation, an online business retailer can significantly increase their revenue while taking advantage of lower shipping rates. However, if you’re an online business retailer operating in any state other than your own, you may be required to collect sales tax on all orders shipped to customers within your state’s borders. The logistics can be complicated, but don’t let that stop you from doing business across state lines. With the proper preparation, you can reap the benefits of selling your products to customers in other states.
1. Read up on the laws for your state
To understand how to collect sales tax across states, you must first understand the law within your state. You can start by researching whether or not the law requires you to collect sales tax on orders shipped from your location and into other states. Know what type of order triggers sales tax collection and understand if you’re required to collect tax on a per-order basis or if you can estimate and collect sales tax on all orders shipped into a particular state at once.
2. Have a Sound Commercial Reason to Expand
Before expanding into other states, you need to understand why you want to do so. If your marketing plan is a solid one and you have reliable state-specific data, then by all means, expand. If not, it may be more prudent to wait until the time is correct before you enter the market. It is important to remember that the internet is not a physical store; shoppers can physically go to another state, take a picture of their purchase, and file a complaint with your state’s tax board. So, it’s best to be prepared and ensure you’re ready to deal with any issues that may arise due to expanding your business across states.
3. Prepare your Location
It is essential to ensure that your online store has a physical presence to quickly collect taxes from orders shipped from other states. One of the most effective ways to do this is by building or buying a fulfillment center with multiple packing docks and shipping equipment. In addition, it’s best to locate your warehouse close to significant metros and shipping centers since customers will feel more comfortable ordering from an online store with a physical storefront if one is available.
4. Avoid Doing Everything Remotely
Although it’s possible to run a business remotely, there are some reasons why there may be better ideas than doing everything from the comfort of your own home. – If you’re doing everything on your own, then there will be a lot of room for error regarding sales taxes. To ensure that you are following the law, have an accountant or someone familiar with sales tax preparation help you deal with orders shipped into other states.
5. Doing Proper Advertisement
It would be best if you advertised to your targeted audience daily. The company can do promotions in multiple ways, but part of that means you need a space where people from other states can see your ads. If no one is advertising their products, then you can’t promote them, and your customers will never know about your local-only product.
There are a few different options for finding an advertising media partner, so it’s best to do some research and find the right one for you.
6. Understanding Shipping Laws and Procedures
Always include a sales tax rate on your shipping labels so that you can easily calculate sales taxes for your customers. If you possess a shipping charge in an order that includes more than one item, have a separate sales tax under the shipping charges label. Shipping a car to another state is different from sending a video game or other electronic device. Whichever type of product you’re selling, ensure you are following the law and providing the necessary information to consumers.
7. Enforcing and Responding to Complaints
It would help if you made sure that customers could quickly contact you and explain their grievances so that you can fix the situation as soon as possible. If a customer gets angry with your company after ordering something, they should be able to email or call the company and let you know what’s wrong. You must respond within a day and offer to fix the problem. By doing this, you will keep your customers happy, and they’ll likely do business with you again.
If you’re expanding your business into a new state, it’s vital to make sure that you follow the law since there are stiff penalties for companies that don’t collect and pay sales tax on orders. However, if you’re prepared, expanding your business across state lines will be much easier.