How to Comply With US Sales Tax For Online Course Businesses

You’re focused on positively changing lives by turning your expertise into an online course business, but you’re a little stressed about how to navigate the finances of it all.

After all, the digital landscape is changing rapidly and so are those pesky state tax laws.

Have no fear in this episode you’ll discover how to comply with US sales tax for your online course business.

Why do you need to know about US State Tax Laws?

Whether you’re based in the U.S. Canada, Europe, or beyond, if you’re building a global brand that serves clients worldwide, not having your pulse on the latest US State tax laws could stifle your revenue growth.

​​Out-of-state sellers may now be held responsible for collecting and paying sales tax anywhere.

State tax laws change month to month, even tax pros are having a hard time keeping up so don’t be overly stressed, but it is important to have some awareness about US state tax laws before you start your online course business.

Is Your Online Course Taxable?

Generally speaking, yes if it’s pre-recorded, automated, and downloadable.

Per an article published by Thinkific April 2019.

Streamlined Sales and Use Tax Agreement aims to standardize US sales tax policy as much as possible. Twenty-four states have adopted the SSUTA guidelines for online courses and webinars ss follows:

  • Do you present the course or seminar live, in real-time? Live Digital Online Educational Services” are not subject to sales tax.

  • Can the participants connect with you in real-time, during the course? If so, then you’re not subject to sales tax.

  • Does an actual human evaluate the students? Then it’s not taxed.

If my online courses are taxable do I have to charge state tax?

Not necessarily.

That all depends on what’s called “nexus.”

What’s a sales tax nexus and which ones impact your online business?

Nexus is the amount of presence a business has in a certain location

Types of nexus:

Economic Nexus

Web Cookies Nexus

Click-through Nexus

Affiliate Nexus

Physical Presence Nexus

In general sales of any kind can trigger a nexus.

It’s always best to consult a tax professional who’s savvy with an online business.

A common threshold is $100,000 in sales or more than 200 separate sales transactions in a given state.

If you determine that you have a nexus in a given state how do you collect and pay US sales tax?

  1. Register for a sales tax permit in that state

  2. Charge sales tax to customers in that state

  3. File sales tax returns in that state.

Is there an easier way?

You can easily keep your business compliant and save yourself the headache of navigating the US sales tax laws with the help of a simple tool that integrates with PayPal, Stripe, Quickbooks, and Amazon called Quaderno.

Where should I house my online course academy?

My go-to recommendation is Thinkific here’s why.

To sign up for your free trial of Thinkific CLICK HERE.