Navigate multi-state sales tax nexus, optimize inventory accounting methods, maximize COGS deductions, and handle marketplace facilitator implications. Expert guidance for D2C, Amazon FBA, and Shopify brands.
E-commerce businesses face unique tax complexities that traditional accountants miss. From multi-state sales tax to inventory accounting optimization, we deliver specialized expertise.
Post-Wayfair, e-commerce creates economic nexus in states based on revenue/transaction thresholds. Most online sellers have nexus in 15-30 states.
Common Mistakes:
Our Solution:
Choosing the right inventory accounting method (FIFO, LIFO, Weighted Average) can save tens of thousands in taxes annually. Most e-commerce brands use sub-optimal methods.
Method Comparison:
Our Approach:
Many e-commerce businesses under-calculate COGS by missing includable costs like freight-in, storage, and overhead allocation. This leads to overpaying taxes.
What Should Be in COGS:
Tax Impact:
Properly calculating COGS can increase deductions by 15-25%, saving $20K-$80K+ annually for a $3M revenue e-commerce business.
If you sell on Amazon, Shopify, Walmart.com, etc., they may collect sales tax as marketplace facilitators. But you still have direct sales requiring tax collection.
Key Considerations:
Our Solution:
Each state has different thresholds for creating economic nexus. Here are some key states:
| State | Threshold | Marketplace Rule | Notes |
|---|---|---|---|
| California | $500,000 | Yes | Sales only, no transaction count |
| New York | $500,000 AND 100 trans | Yes | Must meet both thresholds |
| Texas | $500,000 | Yes | Sales only |
| Florida | $100,000 | Yes | Lower threshold than most |
| Washington | $100,000 | Yes | Lower threshold |
| Pennsylvania | $100,000 | Yes | Lower threshold |
| Illinois | $100,000 OR 200 trans | Yes | Meet either threshold |
| Ohio | $100,000 OR 200 trans | Yes | Meet either threshold |
Important: Thresholds are based on prior calendar year or current calendar yearsales. States vary on which period they use. We monitor all 45+ states with economic nexus rules.
COGS Calculation:
COGS Calculation:
Annual Tax Savings from COGS Optimization:
By properly allocating $243K of costs to COGS instead of operating expenses
$60,750
Same cash outflow, lower taxes
A D2C apparel brand selling primarily through their Shopify store and Amazon. $5M annual revenue, 60% gross margins, rapid growth (150% YoY). Selling in all 50 states.
Sales Tax Compliance:
Tax Optimization:
Tax Savings:
Compliance:
— Founder & CEO
Get a free tax assessment to identify sales tax nexus obligations and tax-saving opportunities.