CPA Services for NJ E-Commerce Businesses & Online Sellers

Frequently Asked Questions

What is economic nexus and how does it affect my online store?

After the Supreme Court's 2018 ruling in South Dakota v. Wayfair, states can require out-of-state sellers to collect and remit sales tax based on economic activity alone (sales volume or transaction count), even without a physical presence. Most states have set thresholds of $100,000 in sales or 200 transactions per year. If you sell to customers across the country, you may have triggered nexus in 20+ states without realizing it.

Does the marketplace collect sales tax for me?

For most major platforms (Amazon, eBay, Etsy, Shopify via automatic collection), yes, marketplace facilitator laws in most states require the platform to collect and remit sales tax on your behalf. However, you are still responsible for tracking where you have nexus, understanding your total liability, and managing states where the marketplace does not fully remit. A nexus analysis helps map your specific exposure.

How do I account for inventory in an e-commerce business?

Inventory is a cost of goods sold item, you deduct it when sold, not when purchased. The method you choose (FIFO, LIFO, or weighted average) affects both your taxable income and your balance sheet. LIFO can reduce taxable income in a rising-price environment but is not allowed under IFRS and requires IRS consent to change. Most small e-commerce sellers use FIFO or weighted average.

What does the 1099-K threshold change mean for my business?

The OBBBA (Section 70432, signed July 4, 2025) permanently restored the federal 1099-K reporting threshold to $20,000 in gross payments AND 200+ transactions, retroactively eliminating the ARPA $600 threshold. The 1099-K reports gross receipts - you still deduct all business expenses to arrive at taxable net income. NJ has its own $1,000 threshold with no transaction minimum.