5 Steps Every eCommerce Merchant Should Take to Stay Sales Tax Compliant

Staying compliant with sales tax is one of the most confusing parts of running an online store. Rules vary by state, thresholds change, and many merchants are unsure when they are required to collect sales tax or how to set up their systems correctly. A clear process helps reduce risk and keeps your operations running smoothly. This guide breaks down the five steps every merchant should take to maintain eCommerce sales tax compliance and avoid costly mistakes as they grow.

1. Identify Where You Have Nexus The first step to staying sales tax compliant is identifying where your business has nexus. Nexus refers to the connection between your business and a state that obligates you to collect and remit sales tax . That connection can come from a physical presence, such as a warehouse, office, employees, or inventory storage, or from economic activity, such as reaching a certain number of sales or transactions in a state.

Many online sellers believe nexus applies only when they operate a storefront. In today’s environment, remote activity or sales volume can establish it. By auditing locations, fulfillment centers, team footprint, and sales activity across states, you can create an accurate eCommerce sales tax checklist and avoid unexpected compliance issues.

2. Register to Collect Sales Tax in Each Required State Once you determine where you have nexus, the next step is registering to collect sales tax in every state that applies. Each state sets its own rules, and the requirements typically depend on factors like sales volume, transaction counts, or physical presence. Skipping registration creates real risks, including penalties, interest, and audit exposure. State revenue websites make the process clearer by outlining sales tax rules for online businesses and provide direct registration portals. The key reminder for eCommerce teams is simple. Once nexus applies, you are required to charge, collect, and remit sales tax in that state. Registering early keeps your operations compliant and reduces preventable issues.

3. Configure Your eCommerce Platform Correctly Once you know where you must collect tax, the next step is to configure your eCommerce platform so taxes are calculated correctly at checkout. Platforms like BigCommerce, WooCommerce, and Shopware offer built-in tools or integrations that let you set up tax zones, rates, and product tax codes.

It is essential to tag products correctly, especially if some are regulated, age-restricted, or tax-exempt , so your store charges the correct rate based on product type and destination. Because tax rules vary by state, you also need to confirm whether your store uses destination-based tax, where the rate is based on the buyer’s location, or origin-based tax, where the rate is based on your store or warehouse location. Proper configuration keeps your checkout compliant and prevents tax errors as your business scales.

4. Collect, Remit, and File on the Right Schedule After you register, the real work begins with collecting, remitting, and filing sales tax according to each state’s assigned schedule. Some states require monthly filings, while others only need quarterly reports, and the frequency is usually tied to your sales volume in that state. Many merchants run into preventable issues that include late filings, mismatched reports, missing marketplace data, or sending payments to the wrong remittance account.

Accurate reporting is essential for online sellers who want a clear process for how to collect sales tax in eCommerce. Automation can help by organizing records and simplifying recurring tasks. Working with an eCommerce agency ensures those systems are set up correctly and monitored with the right expertise. Consistent, on-time filings protect your business and make compliance predictable as you grow.

5. Monitor Changes in Tax Laws and Thresholds Sales tax rules change often , and any merchant selling nationwide must stay informed to remain compliant. States frequently update economic nexus thresholds, product-specific rules, filing deadlines, and other requirements that directly affect how online sellers collect and report tax. A quarterly or annual review of your compliance footprint helps reduce risk and keeps your team aware of new obligations before they become penalties.

Staying up to date can feel complex and time-consuming, yet it is essential for long-term eCommerce sales tax compliance. Falling behind puts your business at risk of legal issues, lost revenue, and operational disruptions. If you want support in simplifying compliance, Smart Solutions is ready to help you move forward with confidence.

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