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Indie builders....will new SCOTUS ruling hurt or help?

#22
buldog5151bass said:
As someone who depends on the internet for a business (not pedals, I make baseball bats), I was fearing this. Between ending net neutrality and starting to collect sales tax on sales out of state, it's the start of knocking out the little guy.
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Forgive me for my ignorance, but how do you make a living making baseball bats? Please explain. I just figured the big name teams buy from a company like louisville slugger or some other major manufacturer. This is very interesting to me so if you have time I'd love to hear a little more.
 
#23
We'll see what Massachusetts eventually does, but currently all residents are supposed to pay the state a "use tax" annually (with their income tax) on all out of state purchases unless they paid a sales tax in the selling state of 5% or more. If the other state's tax is less than 5% only the difference is owed. If no tax was paid (the case of most internet/mail order sales) then the full 6.25% is due. There is a multipage document that outlines the rates in diffferent states in excruciating detail (most residents have probably never even read it). Currently the state has no way of knowing what you bought, so it's strictly an honor system. Most residents put "0" on their tax form. So even if Massachusetts expects sellers to collect the tax in the future, buyers are obligated to pay the tax if the seller does not collect the tax.

The problem for sellers: there are 50 states and each will have different laws to comply with. It's more than just doing the bookkeeping, you will have to cut checks to each state and possibly fill out forms. If sellers are using third party companies to handle their e-commerce, perhaps those companies will do the work but I suspect they will also raise their fees. So I expect all internet/mail order sellers will have increased overhead costs due to this ruling. That may lead to price hikes.
 
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#26
2010P said:
Forgive me for my ignorance, but how do you make a living making baseball bats? Please explain. I just figured the big name teams buy from a company like louisville slugger or some other major manufacturer. This is very interesting to me so if you have time I'd love to hear a little more.
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Lots of little companies out there, last I checked, there were over a dozen companies registered with MLB (another can of worms). I don't sell to MLB. I make custom wood bars by hand, and specialize in 19th and early 20th century reproductions (in addition to making modern bats). There are a number of leagues and teams out there playing ball by 19th century rules (Google vintage baseball). So I don't bore the others, or take this thread too far OT, PM me if you want.
 
#28
With the new economy, and corporate downsizing, with the cutting of full time employees, I doubt there is anyone out there who doesn't know at least one person with a "side hustle" - Uber, Ebay, Etsy, landscaping, whatever. These are the type of people who will be hurt the most by this.
 
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#30
40Hz said:
The issue isn’t so much whether you exceed thresholds or not. It’s the record keeping you’ll need to maintain in order to show you’re in compliance that is burdensome. And the necessary filing you’ll need to do for 50 different states with 50 different sales tax codes is a real problem. My state is easy. There’s basically a tax rate for goods and a tax rate for services. But other states have state, plus complicated county and city sales taxes as well. And some apply the tax to the full invoice amount - which means shipping is also taxable in some jurisdictions last I looked.

All this is really going to accomplish is provide a windfall for all the new service companies that will soon spring up to handle small business invoicing and tax reporting - for a fee. Much like payroll taxes, sales tax is about to become more complicated and risky than it’s worth for a small business to handle in-house without a qualified accounting department.

Way to go SCOTUS!
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Any good sales and invoicing system should allow you to breakdown sales by state, I would think. So an organised small business should be able to check against limits with an hour or so of work, provided the limits are easily available, and I would expect someone will aggregate that.
 
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#31
The issue is how low the threshold is in order to subject someone to the tax. And no, not every part time business uses software to allow an easy check by state. For instance, Money has in-state and out of state sales. That means that most of the little businesses - those without bookkeepers, but people using such software, will have to calculate individually the amount per state. Add in the fact that they mayl have to fill out all fifty returns, whether or not they owe taxes. Add in the fact that now they are subject to an audit by each state. Add in the fact that since they do not have a bookkeeper, they will have to spend the time doing all that on their business. Add in that whether or not they owe the tax, they will have to collect it from the purchaser (or pay that tax out of pocket, cutting into their small profit margins). Add in the fact that not every state has the same tax rate. I could go on.
 
#32
bongostealth said:
Well, sir, I love your products. I am a proud owner of an OptiFet. It's obvious states wish to 'gain' much by way of tax revenue. As you stated, we will have to see each 'threshold' in order to determine how the states will 'attack' each merchant's sales revenue. Hopefully, the smaller sellers will in fact be 'released' from this burden so that these small sellers are not part of the overall 'ratio' of decreased online sales as compared to online revenue. Otherwise, we will have to come up with a 'side chain' stream of tax-free internet revenue, which I believe would be the 'opti' solution.

See what I did there?? ;);)
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I like it!:D

-Frank
 
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#33
-Asdfgh- said:
Any good sales and invoicing system should allow you to breakdown sales by state, I would think. So an organised small business should be able to check against limits with an hour or so of work, provided the limits are easily available, and I would expect someone will aggregate that.
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They already are. Services are springing up all over the place to help you track sales by state, prepare returns for you, and file them. “So all you need to do is pay.”

For a fee.

Funny thing is, if any politico thought this was going to inconvenience or otherwise rein in Amazon, it isn’t. Amazon already offers store front and other ecommerce services. All this is likely to do is make Amazon even bigger by encouraging small businesses to operate under Amazon’s umbrella.

Be careful what you wish for. Unintended consequences can be a killer.
 
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#34
buldog5151bass said:
With the new economy, and corporate downsizing, with the cutting of full time employees, I doubt there is anyone out there who doesn't know at least one person with a "side hustle" - Uber, Ebay, Etsy, landscaping, whatever. These are the type of people who will be hurt the most by this.
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And that's the thing, smaller private businesses will be obsolete soon. The rich keep getting richer...
 
#35
brianrost said:
We'll see what Massachusetts eventually does, but currently all residents are supposed to pay the state a "use tax" annually (with their income tax) on all out of state purchases unless they paid a sales tax in the selling state of 5% or more. If the other state's tax is less than 5% only the difference is owed. If no tax was paid (the case of most internet/mail order sales) then the full 6.25% is due. There is a multipage document that outlines the rates in diffferent states in excruciating detail (most residents have probably never even read it). Currently the state has no way of knowing what you bought, so it's strictly an honor system. Most residents put "0" on their tax form. So even if Massachusetts expects sellers to collect the tax in the future, buyers are obligated to pay the tax if the seller does not collect the tax.

The problem for sellers: there are 50 states and each will have different laws to comply with. It's more than just doing the bookkeeping, you will have to cut checks to each state and possibly fill out forms. If sellers are using third party companies to handle their e-commerce, perhaps those companies will do the work but I suspect they will also raise their fees. So I expect all internet/mail order sellers will have increased overhead costs due to this ruling. That may lead to price hikes.
Click to expand...

Yes, exactly! Everyone is supposed to report their out of state purchases to pay the appropriate sales taxes. So, all this is going to do is transfer the the internet tax collection to the sellers or their 3 party pay systems, like PayPal, instead of the buyer. If you were actually following the law and reporting your purchases on your annual taxes, this new method will be much easier for you.

We will have to wait and see what the individual states have for thresholds and rates. I really suspect that the little guy won't be burdened with cutting 50 state internet sales tax checks.

I live in NY and we have over 70 sale tax jurisdictions that range from 7% - 8.75%. Reporting these sales by jurisdictions takes only a few minutes to tabulate the data for the tax forms every quarter.... I have to do this every three months. So, sales tax reporting for 50 states, once a year, will be nothing really.

I have to charge every NY sale with a sales tax, there are no internet thresholds here. So, what I have done for my NY state customers is charge them the average sales tax of 7.8% and then provide them with free shipping. NY sales cost me more off the bottom line, but I was bothered by the amounts they had to pay compared to everywhere else in the country and this seem a bit fairer to me.

-Frank
 
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#37
If you have collected and reported state sales taxes you would know that a small percentage of that sales tax collected you get to keep, which is called a "discount". If you do A LOT of sales you can make quite a bit on these "discounts".

I expect there are going to be discounts for internet sales taxes too. So, if you don't want this extra burden of collecting taxes or that discount money, then you can arrange for a third party to take it all off of your hands... for no extra fees.

-Frank
 
#40
buldog5151bass said:
As someone who depends on the internet for a business (not pedals, I make baseball bats), I was fearing this. Between ending net neutrality and starting to collect sales tax on sales out of state, it's the start of knocking out the little guy.
Click to expand...
Neither of those should affect most small businesses, particularly those selling physical goods.

Your online presence or store won't be impacted by changes to Net Neutrality, unless you're trying to offer a service that involves streaming.

As noted above, companies like TaxJar have already automated the sales tax process. All your competitors, large and small, will face the same sales tax burden as you. One of those large competitors (Amazon) already collects sales tax for its own (i.e. non-Marketplace/3rd party) sales, and it didn't kill off their business.
 
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