The main taxes are sales tax on taxable sales, income tax on net business profits, and payroll taxes if you have W-2 employees. Sales tax rates and rules vary widely by state.
Yes, Amazon offers automated sales tax collection and filing through its Tax Calculation Services. Sellers provide tax info and product tax codes, then Amazon calculates, collects, and remits sales tax on your behalf.
Typical deductible expenses include inventory costs, Amazon fees, shipping/fulfillment, advertising, marketing, home office expenses, mileage, supplies, and other ordinary and necessary business expenses.
Income tax returns are filed annually. You may need to make estimated quarterly income tax payments to avoid underpayment penalties. Sales tax filing frequency varies by state, usually monthly or quarterly.
Yes, creating an LLC or corporation can limit personal liability and allow you to take tax deductions as a business entity that you couldn't take as a sole proprietor.
Yes, online software tools can automate sales tax calculations, filing, and payments. Small business tax prep software can streamline income tax return preparation, deductions tracking, bookkeeping, and more.
Careful recordkeeping is critical. Be sure to track all Amazon income and business expenses. Maintain receipts, bank records, mileage logs, tax documents, and other support in case of an audit.
