- Author By Miva |
- Posted on
It’s no secret that COVID-19 has had a huge impact on ecommerce sales, as folks have hunkered down in their homes and ordered everything from televisions to dog treats online. McKinsey estimates that the pandemic has propelled the adoption and evolution of ecommerce by ten years.
So, what’s next? What happens in 2021, as the world continues to cope with the pandemic and then shifts, hopefully, into more normalcy with the vaccines rollout? What happens post-COVID?
There are some pretty big implications for ecommerce–as well as the sales taxes that go hand-in-hand with it.
Businesses will hit economic nexus in more locations
Sales tax—like much of life it seems—used to be simpler. You paid sales tax in the state you did business in. That all changed in 2018 with the South Dakota v. Wayfair supreme court case that allowed states to establish economic nexus thresholds and collect from ecommerce providers regardless of their physical location.
But to further complicate things, every state has a different threshold for when ecommerce sellers meet economic nexus in their state. Kansas, for instance, requires you to remit sales tax as soon as you begin selling products to customers in their state, while in New York, you don’t need to pay sales tax until you reach $300,000/year and 100 transactions.
One thing’s for certain, though, as ecommerce sales increase: more businesses will reach economic nexus in more states. That means additional reporting, filing, and remitting. That also means keeping track of the many different requirements that each of these states has when it comes to reporting—whether that be monthly, quarterly or annually. And with some states, your reporting frequency will depend on your sales volume. So, it’s fair to say that compliance will need to be top of mind for ecommerce businesses in 2021.
Increasing efficiency through automation
Savvy ecommerce businesses are finding all kinds of ways to automate. And it makes sense. You want to use your smart, creative people to generate big ideas, forge partnerships, and grow your business—stuff that bots aren’t so great at. But what those bots are good at is performing rote tasks.
Automating sales tax compliance allows your people to focus on what they do best while ensuring your business stays on the up-and-up in a complex landscape of over 14,000 tax jurisdictions and constantly changing regulations. This automation can take the form of calculating sales tax in the course of an online sale, or reporting to each of the states in which you have nexus. You can even set up automation to let you know when you’re approaching nexus, so there are no surprises.
Putting artificial intelligence to work
A.I. promises to level up automation and ease in sales tax compliance. With so many different types of products, categorizing each manually is a huge pain. A.I. promises to lift this burden and other rote tasks like it by making intelligent suggestions based on machine learning from past transactions. In 2021 and beyond, we’re likely to see artificial intelligence continuing to enhance accuracy and ease in the realm of compliance.
Continued democratization of ecommerce
Platforms like Miva are making it easier for anyone with a great idea and a worthwhile product to find an audience and succeed. Entrepreneurs everywhere have the technology to market, sell and fulfill at a scale that was unthinkable even fifteen years ago. And although the regulations around ecommerce may have gotten a lot more complicated in the past few years, technology like TaxJar has risen to the occasion to provide an easy way to automate compliance and filing.
Want to learn more about how ecommerce growth can impact compliance? Join our two-part webinar series on ecommerce transformation to learn about how to grow, and protect, your business.
Contributed by the Editorial Team of Miva Partner TaxJar.