Why Print On Demand Businesses Need Tax Resale Certificates

The Buzz

You have probably heard about a lot of buzz words like e-commerce and POD. You have this vague feeling that other people are making good money on these buzz words and you want to join the party. Tax Resale Certificates are an excellent way to make the most out of your e-commerce business.

What is E-commerce?

E-commerce simply refers to the buying and selling of goods and services on the internet and the data transactions that constitute payment. Brick and mortar stores are no longer the go-to for shopping as more people are going online for their retail needs.

How much money is in E-commerce?

Online shopping has been around for over 25 years and is expected to grow into a 4 trillion dollar industry. It is by far the fastest-growing retail market.

What is POD?

POD stands for print on demand. POD is a printing technology and business process in which designs are not printed until the company receives an order, allowing prints of single or small quantities. 

What is the advantage of POD?

This is an industry that has grown leaps and bounds because of digital printing technology. Before it only made sense to print in bulk because of the relatively high cost of small scale printing. Now, a business can make great margins on printing products just based on customer demand. This means that you no longer have to order in bulk and sit on a bunch of unsold inventory.

What does this mean for me as a budding entrepreneur?

Print on demand is providing an amazing opportunity for people to start their own businesses online without having to provide any capital upfront. This means there is little risk for what could be very lucrative rewards. You offer a selection of designs that can be printed on various items such as t-shirts, hoodies, pullovers, and pop sockets.

How do I get started?

One of the most popular platforms from print on demand is Merch by Amazon. You will first need to apply and be accepted to create an account. Because of the enormous popularity of the program, it was not unusual for people to wait months before they got a confirmation. The way you create an account is by requesting an invitation from Amazon. After you request an invitation and sending a letter about yourself, Amazon will review your invitation and accept or reject your application. The process can take up to 6 months to be approved. It is hard to wait for an invitation but the good news is that you can spend that time researching so you will be ready to go once Amazon approves your request.

Follow these steps:

  • Get Your Account
  • Make a Gameplan.
  • Recognizing Merch T-Shirts.
  • Understanding Amazon Best Sellers Rank.
  • Check the Competition.
  • Creating Your First T-Shirt

Amazon has the following tiers:

  • Tier 1: 10 designs.
  • Tier 2: 25 designs
  • Tier 3: 100 Designs
  • Tier 5: 500 Designs
  • Tier 6: 1000 Designs
  • Tier 7: 2000 Designs
  • and goes on… up to 16,000 or more…

The truth of the matter is many people have actually turned this print on demand-side hustle into a lucrative money-making business that pays more than many full-time gigs.  In fact, a Merch by Amazon business actually sold for almost six figures in as little as 19 days!

What Is A Tax Resale Certificate

A tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell.

What Is Sales Tax Nexus?

Nexus is defined as having a presence or a significant connection to a state. Your sales tax obligations as an online store owner vary. Most of the time, however, a mere economic connection to a state is enough to create nexus.

State connections include:

  • Having offices in the state
  • Warehouses and distributors located in the state  
  • Employees
  • Affiliates located in the state
  • Making a certain amount of money or transactions in a state 
  • Doing physical business in a state for some time 

Here are some examples of other connections to a state that could result in sales tax:

  • Click-Through Nexus legislation- This usually requires a remote seller to meet a minimum sales requirement in the state resulting from an in-state referral agent who is a resident of the state. The agent must be making commission payments to the referral agent for any sales that are the result of the click-through referrals from the agent’s website. 
  • Affiliate Nexus legislation– A remote retailers hold a substantial interest or are owned by a retailer that is located within the state and sells a similar type of product under a similar business name. Instate retailers can also be used to promote or market the product to in-state customers. Affiliate nexus does not require common ownership and may not include services such as sales and delivery.
  • Marketplace Nexus legislation– This definition applies to marketplace facilitators who operate a business in the state and provides e-commerce infrastructure, customer service, payment processing, and marketing services to individual sellers. The facilitator is the one that is required to register with the state and collect the sales tax rather than the individual sellers.
  • Economic Nexus– An out-of-state retailer generally is required to collect and remit sales tax once the retailer meets a set level of sales transactions or gross receipts activity (a threshold) within the state. No physical presence is required.

Do All States Charge Sales tax?

There are also states that do not charge sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge sales tax on a state level. Alaska and Montana do allow municipalities to charge sales tax on retail goods at a local level. A tax retail certificate is not needed in these places with regard to a state sales tax.

Tax Resale Certificate Is Here To Help

Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. This way you can completely focus on the great opportunities presented by your Print on Demand business.