Let’s be honest: sales tax is probably the least glamorous part of running your own ecommerce shop. You’d rather be picking packaging, tweaking product photos, or, you know, actually selling. But if you sell on marketplaces like Amazon, Etsy, eBay, or Walmart, sales tax compliance isn’t something you can just ignore and hope for the best. The rules have changed a lot in the last few years, and for solo sellers, the landscape can feel like a maze with shifting walls.
Here’s the deal: it’s not as scary as it sounds once you understand who’s responsible for what. And honestly? A lot of the heavy lifting now falls on the marketplaces themselves. But not all of it. Let’s break down what you actually need to know — without the jargon headache.
What Changed? The Marketplace Facilitator Laws
Back in the day, if you sold a widget to someone in another state, you were responsible for collecting and remitting sales tax in that state — but only if you had “nexus” there. Nexus basically means a connection, like a warehouse, an office, or enough sales volume. For a solo seller, tracking that across dozens of states was a nightmare.
Then came the marketplace facilitator laws. Starting around 2017 and spreading like wildfire after the 2018 Wayfair Supreme Court decision, these laws shifted the burden. Now, most major marketplaces are considered the “facilitator” of the sale. That means they collect and remit sales tax on your behalf for transactions that happen on their platform.
Sounds great, right? Well, mostly. But there’s a catch — or a few of them.
Where Solo Sellers Still Get Tripped Up
Just because Amazon or Etsy handles the tax on marketplace sales doesn’t mean you’re off the hook entirely. Here are the sneaky spots where compliance can still bite you.
1. Your Own Website or Social DMs
If you sell a single item through your own Shopify store, a Facebook post, or even a DM, that’s not a marketplace sale. You’re the seller, and you’re on the hook for sales tax if you have nexus in the buyer’s state. Many solo sellers forget this because 95% of their revenue comes from Etsy. That one-off direct sale? It still counts.
2. Inventory Storage and Returns
Let’s say you store inventory in a third-party warehouse in Texas. Or you use Amazon FBA, which spreads your stuff across the country. That physical presence can create nexus in those states — even for sales you make outside the marketplace. Suddenly, you might owe tax on direct sales to customers in those states, too.
3. The Marketplace Might Not Collect in Every State
Most big platforms collect in all states with sales tax. But smaller or niche marketplaces? Not always. And some don’t collect on certain categories, like services or digital goods. You need to verify what your specific marketplace actually does. Don’t assume.
Your Compliance Checklist as a Solo Seller
Okay, so what should you actually do? Here’s a simple, no-fluff checklist.
- Find out if your marketplace collects sales tax. Check their help docs or seller policies. Amazon, Etsy, eBay, Walmart, and most big names do. But confirm for your specific category.
- Track your direct sales separately. Keep a clear record of any sale that didn’t go through a marketplace. That includes your own website, invoicing, social media, etc.
- Determine your nexus states. Do you have inventory stored somewhere? An office? A contractor? Even a short-term pop-up event can create nexus. List every state where you have a physical or economic connection.
- Register for a sales tax permit where required. If you have nexus in a state and you make direct sales there, you likely need to register. Some states have simplified solo seller rules — check.
- File returns — even if you owe $0. This is the boring part. If you’re registered in a state, you usually have to file a return, even if you made no taxable sales. Skip it and you’ll get penalties.
- Use a tax automation tool if you can. Honestly, for a solo seller, a spreadsheet can work at first. But as you grow, tools like TaxJar or Avalara can save your sanity. They plug into your store and marketplace accounts.
Common Myths That Cost Solo Sellers Money
Let’s clear up a few things I hear all the time.
| Myth | Reality |
|---|---|
| “The marketplace handles everything, so I’m done.” | Only for marketplace sales. Direct sales are still on you. |
| “I’m too small to worry about nexus.” | Economic nexus thresholds can be as low as $100,000 or 200 transactions in some states. And physical presence has no minimum. |
| “I only sell digital products, so no sales tax.” | Many states tax digital goods. Rules vary wildly. |
| “I don’t need to register if I owe no tax.” | If you have nexus and make taxable sales, you often must register and file — even with zero liability. |
That last one catches people off guard. Registering isn’t just about paying; it’s about reporting.
How to Keep It Manageable (Without Losing Your Mind)
You’re a solo seller. You don’t have a finance department. So here’s the practical approach.
- Set a monthly “tax hour.” Once a month, download your marketplace reports and your direct sales. Reconcile them. Note any states where you might have new nexus.
- Keep a nexus tracker. A simple spreadsheet with columns for state, reason for nexus (inventory, office, economic threshold), and registration status. Update it quarterly.
- Don’t ignore physical presence. That includes your home if you ship from there. Your home state almost always has nexus for you.
- Ask for help when you scale. A CPA who knows ecommerce is worth their weight in gold. But you can DIY the basics for a while.
And sure, it feels like a lot. But remember: the marketplace facilitator laws removed the biggest headache — collecting tax on every single order across 45 states. What’s left is mostly about awareness and record-keeping.
The Future of Sales Tax for Solo Sellers
States are getting hungrier for revenue. You can bet they’ll keep tweaking rules, adding new thresholds, and going after small sellers who slip through the cracks. At the same time, marketplaces are getting better at automating compliance. The trend is toward more consolidation — fewer manual filings, more real-time reporting.
But here’s the thing: you can’t outsource responsibility. Even if Amazon collects the tax, you’re still the one who gets the letter if something goes wrong. So stay curious. Read the updates. And don’t be afraid to ask a pro when you’re unsure.
At the end of the day, sales tax compliance is like flossing. Skip it for too long and you’ll end up in a painful, expensive chair. Do it regularly — even just a little — and it becomes a boring, forgettable habit. And boring is exactly what you want when it comes to tax.