Manufacturers, Are You Selling Directly?

It used to be fairly simple: manufacturers had factories and produced goods. They sent these to retailers, who sold them. Manufacturers didn’t need to collect sales tax from retailers; retailers collected the sales tax. The line has gotten blurred. At this point, many manufacturers sell products directly from their websites, operating as ecommerce merchants for their own brands. Even if you haven’t gone that far, however, you might be selling directly to the consumer.

Consider these examples: A cosmetics company sells customer favorites which are no longer in distribution. A tool maker sells manuals and spare parts for their tools, both online and at trade shows. A swing set manufacturer drop ships products to consumers who place orders through a school supply catalog. A bookseller sells books at conventions and conferences. A food producer sells cookbooks or special cooking tools at their website. A toy company sells directly to consumers who do not have access to an authorized dealer. While you don’t have an ecommerce site or a catalog, you will sell directly to consumers who call.

You sell limited-edition products in a gift shop to individuals who come on tours of the factory. It’s very possible that some of these companies don’t think of themselves as retailers, and don’t expect to have to collect sales tax. However, depending on their state laws, any of them might be required to do so. Since the requirements for collecting sales tax depend on a number of factors, anyone making a sale of the kind described above has to know at least the following things: The state where the sale was made, and whether the company has nexus there, The state of the purchaser, if the sale was remote, How the sale was made (i.e., online or in person) Any shipping or delivery costs. Whether the item is taxable in the jurisdiction of the sale. If you’re making occasional casual sales, you might
not know these things — and you might have a hard time figuring out when, where, and how you need to file sales taxes. Do yourself a favor and set up a simple, consistent system for sales before you make any.

Installing automatic systems for calculating, collecting, and filing sales taxes now will keep you from facing a painful audit in the future. SalesRaxDataLINK is used by manufacturers across the country. Call us now and let us show you how easily our tools will fit your needs

Latest Articles

Senate Finance Committee Examines Wayfair Decision

Senate Finance Committee Examines Wayfair Decision

The Wayfair decision Four years ago, the Supreme Court's decision in South Dakota vs. Wayfair changed everything about sales tax compliance for businesses with revenue from multiple states. Instead of being responsible only for transactions in states...

read more
Do We Still Care about Physical Nexus?

Do We Still Care about Physical Nexus?

The new nexus Before the Supreme Court's decision in South Dakota vs. Wayfair, remote sellers only had to collect sales tax when they had a physical presence in a jurisdiction. A store, a warehouse full of your products, affiliate sellers -- these...

read more
Sales Tax and Barter

Sales Tax and Barter

a The Barter Life It used to be that businesses only had to collect and file sales taxes if they had a physical presence in a state: an office, a store, a warehouse, or a factory, for example. A small business using e-commerce to sell in other states or...

read more