E-commerce businesses based in NJ face unique challenges: multi-state sales tax obligations, marketplace facilitator rules, inventory tracking, and platform-specific payment timing.
Multi-State Sales Tax
If you sell to customers in other states and exceed their economic nexus thresholds (typically $100,000 in sales or 200 transactions), you must collect and remit sales tax in those states. Tools like TaxJar or Avalara can automate this.
Marketplace Facilitator Rules
If you sell through Amazon, Etsy, or similar platforms, the marketplace is generally responsible for collecting and remitting sales tax on your behalf. But you still need to track these amounts for bookkeeping and ensure they’re not double-counted.
Inventory and COGS
E-commerce businesses must track cost of goods sold — the cost of the products you sell, including materials, shipping to you, and direct labor. Proper COGS tracking is essential for accurate profitability reporting and for your tax return.
Payment Timing
Amazon, Shopify, and other platforms don’t pay you immediately. Reconciling platform payouts to your bank deposits requires understanding the timing difference, fees, refunds, and chargebacks.
NJ Considerations
NJ requires you to collect sales tax on taxable goods sold to NJ customers. Even if you sell primarily through marketplaces that handle collection, you need to file NJ sales tax returns if you’re a registered seller.
Disclaimer: The information provided is for general educational purposes only and does not constitute tax, legal, or investment advice. This content is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Tax outcomes depend on your specific facts and circumstances. Viewing this material does not create a CPA-client relationship. Personalized advice is provided only through a signed engagement letter.
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