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Our accounting services are exclusive to inventory businesses in the United States and Canada

Take the Amazon Tax Rate Off Your Plate for a Successful Business

Michael Pignatelli
Last Updated on August 31, 2023

Amazon is a battlefield where millions of sellers compete for buyers’ attention. To win and secure a steady stream of sales, sellers like you have endless tasks to accomplish. Nevertheless, like a light at the end of the tunnel, you’ll find relief that the eCommerce giant already has a system updated with Amazon sales tax rates. Amazon also computes, collects, refunds, and remits these taxes, so that you don’t have to.

This blog will explain how the Amazon effective tax rate handling works. We’ll also share how you can utilize the time and energy you save by focusing on other essential parts of your business.

Taking the Amazon Tax Rate Off Your Plate

Sales taxes are one of the most complicated tasks to handle as an Amazon seller, as the duties vary in every province and state. These are also the taxes that are most sensitive to change as localities can enact ordinances changing the rules and rates any time. Although difficult, Amazon has your back as it has all the tax details in its system, including any rule changes. 

Let’s get to know some terms to enlighten you about this assistance. 

  • Marketplace Facilitator Law (MPF): This law delegates the sales tax computation, collection, refunds, and remittances to classified marketplace facilitators like Amazon.
  • Marketplace Tax Collection (MTC): This is Amazon’s service that puts into action the mandate of the MPF.
  • Origin-based tax sourcing: The sales tax rate is based on the package's source. 
  • Destination-based tax sourcing: The sales tax rate is based on the package's destination. 

Not all US states and Canadian provinces are under MPF jurisdiction. When you send orders to non-MPF places, it’s your responsibility to handle sales taxes. 

The Various Assistances You Can Get

Aside from the sales tax assistance through the MPF, these are the ways your Amazon selling experience can improve.

Amazon Tax Data Collection

Together with Amazon’s MTC is the collection of all sales tax-related data you can access on Seller Central’s Tax Document Library. You can integrate this data into your books to generate a complete report about your business finances. This data will also come in handy during tax season when you need to declare your income tax return

Tax Software

If you ever receive orders from non-MPF places, having the proper tax software is as efficient as the MTC in staying compliant with sales taxes rules. On top of sales tax computation, most tax software also have these features:

  • Conversion of receipt, invoices, and documents from image to text form for data storage
  • On-time tax filing and remittance
  • Collection, storage, and application of tax-exempt certificates
  • Data ready for tax season

Bookkeeping and Accounting Software

Bookkeeping and accounting are essential to get a view of your business finances. Plenty of software like Quickbooks Online and Xero can make these tasks easy. These tools can store all the data you gather from Amazon and your tax software to generate complete and comprehensive reports every time. 

Complete Assistance From Agencies

If all the software and integration sound like a lot of work, you can partner with agencies that can do bookkeeping and accounting for you. These teams are equipped with tax, bookkeeping, and accounting software, plus the knowledge to operate and make the most of these tools. In addition, your account managers will keep you posted about your business finances through timely reports.

amazon sales tax rate

Channel Your Energy to These Areas

Whether you get additional assistance or not, you are sure to get MTC assistance when you sell on Amazon. Hence, you’ll have extra time and energy which you can channel into these areas of your business.

  1. Store Optimization

You need to optimize for your product listing to appear on the first pages of buyer search results and hopefully get more sales. A10, Amazon’s algorithm, crawls through all stores to check product titles, descriptions, and store backend keywords, so you’ll need to include ranking words in your store to attract A10’s attention.

  1. Amazon Sponsored Ads

Sponsored Ads also boost your ranking as placing the ads in strategic locations and making them attractive can garner more clicks and, possibly, sales. You’ll have more time to strategize which type of Amazon Sponsored Ads to launch for your business with sales taxes off your plate.

  1. Affiliate Marketing

With taxes taken care of, you’ll have time to reach out to influencers, ranking websites and blogs, and create social media accounts. These are the spaces where you can post and share affiliate links to help you get more sales. 

  1. A Store Website

Buyers will know your brand and products more when you have your website. You can build one and fill it with informative and interesting content with the extra time and energy you have. You can even take time to understand the statistics and impact of your website on your Amazon store.

  1. Amazon Black Hats

With the stiff competition on the platform, some resort to dire tactics to get ahead of others. You can check out these black hat practices or fortify your store protection to avoid being a target to these.

Amazon Bookkeeping Assistance from Unloop

It can be difficult to keep up with all the changes in Amazon tax rates and laws, not to mention trying to optimize your business for success. But don't worry; there are several different ways you can get assistance when it comes to Amazon taxes, from the MTC and various accounting software, to full-service agencies. With the extra time and energy, you can channel your efforts into making your business succeed on Amazon instead!

So take a deep breath, relax, and let Unloop help you take that extra weight off your shoulders. We offer full Amazon assistance, from updating your books to helping you stay on top of your taxes. You can enjoy these services now by booking a call so that we can discuss the details with you. Hope to hear from you soon!

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228 Park Ave S #82849
New York, NY 10003
United States
7676 Woodbine Ave #2
Markham, ON L3R 2N2
About unloop

Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.