Amazon is the biggest platform to sell products across the globe, but with every financial venture, taxes are just around the corner to lessen the hard-earned income of Amazon sellers.
As an Amazon seller, you're obligated to make a sales tax collection for every purchase. But the good news is that dropshipping is among the few eligible ventures for Amazon Tax Exemption Program (ATEP). In this blog post, we'll show you how to get tax-exempt on Amazon in minutes. Keep reading to learn more!
Quick Steps on Registering for a Sales Tax Permit
If you're planning to resell products online, you'll need a sales tax permit, which will allow you to collect sales tax from items sold. But, in this case, it allows you to apply for Amazon Business's Tax Exemption Program.
In most states, registering for a sales tax permit is relatively simple and can be completed online. Let's help you get started.
#1. Compile All Business-Identifying Info
Having all of your ducks in a row from the beginning is important as a business owner. This will ensure that you can always correctly identify yourself and your business when dealing with government agencies or financial institutions.
Double-check if you have the following proper documentation for your online business.
- EIN. The Employer Identification Number is a unique nine-digit number assigned by the IRS for the sole purpose of tax collection. Other names it goes by are FEIN (Federal Employer Identification Number or FIN (Federal Identification Number).
- Business Bank Accounts. A dedicated bank account for your online business can help identify your online business as legitimate.
- Trademark Registration. Trademark registration offers several important benefits, including deterring others from using your mark and giving you the exclusive right to use the mark in commerce. Additionally, trademark registration can serve as evidence of ownership and help protect your investment in your brand.
#2. Apply to the State Department of Revenue Website
This government institution is responsible for collecting taxes and administering tax laws. Every state has a Department of Revenue, and each oversees taxation within its borders.
To register your online business, visit your state's Department of Revenue website and click on the Sales and Use Tax Section. You can easily read through and complete all the necessary info to get your sales tax permit.
How to Get Tax Exempt on Amazon in Minutes
You're one step closer to getting your tax exemption status approved now that you have your sales tax permit. Next is heading over to your Amazon account and applying the following steps.
#1. Select the States You Want to Avoid Sales Tax Exemption In
Under US law, online sellers make sales tax collection in states with a physical presence or nexus. Amazon has used this loophole to its advantage, systematically avoiding collecting sales tax in most states.
There are states dropshippers can get Amazon tax exemption from, so be sure to click on them when applying for it.
- Pennsylvania
- Texas
- Utah Virginia
- West Virginia
- Wyoming
- Iowa
- Idaho
- Indiana
- Kansas
- Kentucky
- Michigan
- Minnesota
- Rhode Island
- South Dakota
- Tennessee
- Missouri
- North Carolina
- North Dakota
- Nebraska
- Wisconsin
- Georgia
- New York
- Ohio
- New Jersey
- Nevada
- Alabama
- Arkansas
- Arizona
- Colorado
- Connecticut
- Vermont
- Washington
- Oklahoma
You will notice that some places are not included in Amazon business tax-exempt. It's because these states do not levy sales taxes.
- Delaware
- Alaska (only some municipal governments)
- Montana
- New Hampshire
- Oregon
Meanwhile, avoid clicking on the states that require you to upload state-specific permit numbers and additional information. Instead, only select them if you have the required tax exempt documentation for the following states.
- Alaska
- Florida
- Hawaii
- Illinois
- Louisiana
- District of Columbia
- California
- Maine
- Maryland
- Massachusetts
- Mississippi
- New Mexico
- Puerto Rico
- South Carolina
#2. Fill Up Your Organization's Info
After picking the states you are applying for Amazon tax exemption in, input your small business's information from its name to the type of property you sell. This includes your sales tax permit and other tax exempt documentation.
Double-check everything, and you'll be directed to a page where you will sign your Amazon tax exemption certificate. Finally, click Activate Certificates. Your Amazon tax exempt status will take effect in 15 minutes, whereas Amazon Business will upload the Amazon Tax Exemption Certificates within 24 hours.
Stay Tax Compliant With Unloop
If you're looking to start a dropshipping business or are already in the throes of running one, it's important to stay compliant with sales and income tax laws. As an Amazon seller, one way to do this is by applying for sales tax exempt status. To qualify, your business must resell items to learn how to use tax-exempt on Amazon.
Unloop can help you through the process and make sure everything is filed correctly so you can continue earning profits without worrying about penalties from the government. Are you ready to get tax-free income? Book a call today!