You are probably all too familiar with sales tax – that extra percentage stores collect from customers when they buy something. Businesses in certain states that collect sales tax must add state and local sales taxes to the customer’s total bill, collect it and then file it. But did you know that if you sell your products online, you may or may not have to do the same?
One thing that is important to understand is that ArtFire is a marketplace, not a marketplace facilitator. What does that mean exactly? A marketplace facilitator is a third-party platform that allows individual businesses to sell products and services via their site. They post the items for sale, process the transactions, and many times ship the items. Again, ArtFire is not a marketplace facilitator. We give you a platform to list your items, but we do not get involved in the sale itself. How does this affect taxes? ArtFire does not process payments, therefore we do not collect/pay taxes on your behalf.
ArtFire can, and does, automatically calculates taxes for you and adds the calculated amount to your sales price upon checkout – this amount will be included in the payment you receive from the buyer. You may also choose to elect to independently collect taxes, which means that you will be calculating any sales tax that your business is responsible for outside of the ArtFire system. All ArtFire sellers are responsible for filing and paying their collected sales tax with their state and local governments based on their nexus.
“Nexus” is a specific type of connection to a state that’s significant enough for you to be required to comply with that state’s sales tax laws. Sales tax nexus occurs when your business has some kind of connection to a state. All states have slightly different definitions of nexus, but most of the time states consider that a “physical presence” or “economic connection” which then creates a nexus. Here is a link to a good resource to start determining if you have nexus. https://www.taxjar.com/states/
If you wish to collect taxes independently, you may select that option once your sign up is complete, by doing the following:
- Log into your account
- Click on the Items tab
- Click on My Tax Settings
- Click the “Collect taxes independently” box and click on the save button
If you wish for ArtFire to automatically calculate taxes and add them to the payments from your customers for you, then no further action will be needed on your part. Simply make sure your correct zip code is entered upon sign up.