How to prepare for Black Friday/Cyber Monday
by November 18, 2023
Please note: This blog was originally published in 2020. It’s since been updated for accuracy and comprehensiveness.
As the official start of the holiday shopping season, Black Friday is often called “the busiest shopping day of the year.” Many say that the “black” in Black Friday refers to the fact that many retailers will begin to turn a profit. Whether or not that’s actually true, we can all agree that Black Friday/Cyber Monday weekend will bring in a lot of welcome sales for e-commerce retailers across the country.
But retailers should also consider how an increase in sales will impact not only profit, but sales tax responsibilities as well. As you prepare for the upcoming shopping season, make sure your business is fully prepared for possible economic nexus implications.
Track your sales
Since economic nexus is based on your gross sales and/or transaction volume, it’s very important to know where you stand. If you’re doing a large volume in sales and aren’t able to keep up with spreadsheets, we recommend using TaxJar’s Sales & Transactions Checker. This free tool tracks how many transactions you had within each state, as well as the total amount of gross sales delivered into each state.
Also, you’ll need to have clear tracking what you’re selling across all of your sales channels. Economic nexus isn’t broken up by sales channel, it’s tracked at the state level. No matter where you sell, all of your websites, platforms or marketplaces contribute towards your total count of economic nexus activity in a state.
Know the thresholds
Tracking sales thoroughly is just the first part of the process. The second part is understanding what the thresholds are in the states you do business. If you’re selling only in a brick-and-mortar environment, you only have to worry about a limited number of states. However, running an e-commerce business is where things can get complicated because you’re now responsible for managing your sales tax nexus across the entire country.
And while the shipping destination is what determines which state has jurisdiction over the sales tax, it’s important to remember that you only need to collect in states where you have economic or physical nexus.
There are usually two parts to current economic thresholds. First, there may be a threshold for the number of transactions made. Then, there may be one for the amount of gross sales made. Each state’s sales tax commission will have information on whether there are current or pending economic sales tax laws on the books. But if you’re looking for a quick reference, check out our state by state breakdown of current economic nexus laws.
Prepare for future changes
If the Black Friday/Cyber Monday weekend sales will trigger economic nexus in new states for you, you’re not alone. Many businesses will find that the fourth quarter gross sales will push them over the thresholds. This is because most of the laws specifically state that the thresholds are per calendar year or in some cases, the previous calendar year.
TaxJar is here to help. We have a helpful guide on how to register for a permit in every single state. It will give you the basic info on who needs a permit, how to register for one, and where to find more information about the whole process.
As the holidays approach, make sure you stay updated with the changes in economic nexus as they come. The TaxJar blog is a good place to check in for updates to new sales tax laws and how they impact your business.
If you’d like to streamline your tax compliance this holiday season, see how TaxJar can help and start a free trial today.
