You’ve created and have begun to sell your digital course to the masses.
But now you start to panic because you just learned that maybe you should be charging, collecting and remitting sales tax on this course.
And this panic is then induced by having absolutely no idea what to do to even start with sales tax for your business.
Let’s break this down and make it a little bit easier.
Is your digital course taxable for sales tax?
The answer is most likely going to be a yes.
But every state has their own rules and regulations for sales tax. Sales tax is a state tax. So there are 50 different sets of rules and regulations for sales tax in the USA.
You can find out pretty quickly if your digital course is taxable by conducting a quick google search.
All you have to search is “digital courses taxable for sales tax in {state}”. This search will give you the answer in the first description, you won’t even have to click on another page.
This will answer your first question about whether you need to charge, collect and remit sales tax for your digital products.
Who do I charge sales tax to?
Now that you have determined whether or not your digital course or product is taxable in your state, the next question then becomes, who am I actually charging sales tax to?
Now remember, sales tax is a state tax. It is determined by each state whether to charge tax on the items or not.
AND sales tax is due based on where the BUYER lives.
Sales tax is due based on where the buyer lives
This determines whether or not you need to be charging sales tax on the purchases of your course.
When someone buys your course, you (or moreso your software that helps you sell your course) need to determine if you need to charge sales tax or not on the purchase.
Do I need to collect and remit sales tax for every state?
This one is going to depend.
You always need to collect and remit sales tax for your home state.
For example, if you live in Nebraska, you need to register for a sales tax license and collect and remit sales tax for any purchases where the buyer also lives in Nebraska.
For any other state, it will depend on if you meet the thresholds. Every state has determined their own thresholds (buy many of them are very similar).
And you have to meet the threshold in each state before you need to register for a sales tax license for that state.
But once you meet the threshold once, register and have a sales tax license, you will continue to have to collect and remit sales tax for that state, whether you have met the threshold or not the next year.
Check out this article for more information on the thresholds that need to be met in each state.
When are taxes due to the state?
For most states, they are due on the 20th of the month after they were collected.
For example, you collected $500 of sales tax in September. The $500 must be remitted to your state by October 20.
But again, this may be different by state. You will need to check with your own state’s Department of Revenue website to get your questions answered.
Can you help me with my business and whether I need to collect and remit sales tax or not?
I can help you for a fee. Book your session here and I’ll help you to understand your state’s sales tax for you and your business.
Each business is unique.
There are also 50 states, each has their own rules and regulations. I need to sit down and do the research to figure out what is taxable for you and your business on a 1 on 1 basis.
I am willing to help you more, you’ll just have to book a session with me for this.
Sales tax is something you do need to know in your business
Taxes are a part of doing business. But sales tax is also paid by the buyer, not out of your pocket. You are just an agent for the state when you collect sales tax on your courses.
But you must remit it to your state when you collect. (The fees for not remitting it can be quite astronomical!)
What other questions do you have about sales tax?
