This post is going to help you understand what sales tax is and why it's necessary while you're making sales on your store. If you've felt confused about what the point of sales tax is, then continue reading so you can get to grips with sales tax!
What Is Sales Tax?
Sales tax, sometimes known as VAT, IVA, and other names is the tax collected during the sale of products and given to the governing country of the customer. We've had emails previously where stores simply don't understand what this tax is, who pays it, or what it's for. We've even been asked to disable it on their store! This is of course impossible. Sales tax is a legally obligated tax that must be charged for a product that is sold 'business to customer' known as B2C. (Sales made from 'business to business' known as B2B are not charged sales tax, but as Tebex only sells to customers and not businesses, you aren't able to claim back your tax on purchases made via Tebex Checkout.)
Let's watch a short video that explains the concept of sales tax in simple terms, it's less than 4 minutes long.
Why Is This Necessary?
Taxes, including sales tax, are paid to the government and are used in the government budget. So, for example, the sales tax that you pay may go ahead and contribute to police, healthcare services, fixing roads, local councils etc. Taxes are an important part of running a business, and sales taxes are not to be confused with income tax, this is an entirely different kind of tax. We're only going to be discussing sales tax in this blog post.
Much like other taxes in life, sales tax is enforced by the government and they are mandatory, which means, this must be paid. However, one of the best things about Tebex Checkout is that we organise all of this for you. If you weren't using Tebex Checkout, chances are you'd need to manually be working out how much tax to charge people in different US states (they have different laws) and in each country! You'd also have to organise paying this tax directly to the local governments, which often requires the use of an accountant which is an additional expense. We know managing sales tax can be a burden - you can be spending your valuable time with your community instead - so we do all of this for you.
How Sales Tax Works On Tebex
We will automatically collect and pay sales tax for your store - there's absolutely nothing that you need to do in regards to the collection and paying to local governments!
You can configure who pays sales tax however, do you want the sales tax to be charged to the customer on top of their basket? (The customer pays). Or, do you prefer to have the tax deducted from your earnings? (You pay, so your customer doesn't have to). You can configure this setting by heading to Payment Method > Settings. Our knowledge base article provides some more detailed information about sales tax on Tebex, you can view it here.
Here are answers to some frequently asked questions about sales tax:
Do I Need To Do Anything Else?
It's always a good idea to get an accountant to go over your finances to make sure you're paying everything you're obligated to pay so you don't get an unwanted surprise later. Because Tebex handles sales tax on your behalf, we take care of the boring administration (that most people hate!) so you can focus more on your community.
If you have any other questions just send our friendly support team an email (support@tebex.io) and they'll be happy to help you with your questions.
You might also find these links useful:
How to use coupons, Sales strategies, How to write your product descriptions, Protecting your account, Tebex Academy Youtube channel.