A few years ago, sales tax was one of the scariest parts of selling online. Today, for most small sellers, the marketplaces do most of the work. But "most" isn't "all." If you have your own website, buy inventory for resale, or are setting up a business entity, there are still things you need to do. Here's how it breaks down as of October 2026.
Sales tax rules differ by state and change often. This is a general overview plus what I've done in New York. Confirm your obligations with your state's tax department or an accountant.
Marketplaces collect for you
Every state that has a sales tax now has a marketplace facilitator law. Amazon, eBay, Walmart, Etsy, TikTok Shop, and similar platforms calculate sales tax at checkout, collect it from the buyer, and send it to the state. It doesn't come out of your payout, and you don't remit it.
Two things are still on you:
- Your home state may want a return anyway. If you're registered to collect sales tax, many states, New York included, expect you to report your marketplace sales on your return, then deduct them as sales where the marketplace already collected the tax.
- Fees are charged on the tax. eBay calculates its final value fee on the total sale including sales tax. You don't keep the tax, but you pay a percentage on it. See eBay fees explained.
Your own store: you collect
On Shopify or any site you run, there's no facilitator. You're the seller, so you're responsible for collecting and remitting sales tax wherever you're required to. That depends on where you have nexus, meaning enough connection to a state that it can require you to collect.
Physical nexus
You have nexus in your home state, and anywhere you have an office, employees, or inventory. That last one is worth thinking about: inventory sitting in a fulfillment center can create nexus in that state in some cases. Many states don't enforce this for inventory held by a marketplace for marketplace sales, but rules vary, so it's worth asking an accountant once your inventory is spread around the country.
Economic nexus
Since the 2018 Supreme Court case South Dakota v. Wayfair, states can require you to collect once your sales into the state pass a threshold, even if you've never been there. Common thresholds:
| Threshold | Examples |
|---|---|
| $100,000 in sales per year | Most states |
| $500,000 in sales per year | California, Texas |
| $500,000 and more than 100 transactions | New York |
States also differ on whether marketplace sales count toward the threshold. For a small store selling mostly on marketplaces, your own website is unlikely to cross another state's threshold for a while. Your home state is the one that matters from day one.
Registering in your home state
If you sell taxable goods directly to customers in your state, you need to register with your state's tax department before you start. In New York, that's a Certificate of Authority, which you apply for online through NY Business Express at least 20 days before you begin selling. It's free.
Once registered, you file returns on a schedule, quarterly for most small sellers in New York, even if you owe nothing. Missing a return because you had no direct sales still counts as a missed return, so put the due dates on your calendar.
If you form an LLC, the LLC is a new entity and needs its own registration. When I moved my store from a sole proprietorship to ML Necessities LLC, I applied for the LLC's certificate as a change in organization, and I'm closing the old account with a final return. The rest of that process is in setting up an LLC for your reselling business.
Setting up tax on Shopify
- In Shopify, open Settings, then Taxes and duties.
- Add the states where you're registered to collect, with your registration number.
- Shopify calculates the rate for each order by delivery address, including local rates.
- Check whether shipping is taxable in your state. In New York, shipping charges on taxable items are taxable too.
- Use Shopify's tax reports at the end of each period to fill out your return.
Shopify calculates and collects the tax, but it doesn't register you or file for you unless you use a paid filing service. The filing is still your job.
Buying inventory without paying sales tax
If you buy products to resell, you generally shouldn't pay sales tax on them, because tax gets collected when the end customer buys. You show suppliers a resale certificate instead. In New York that's Form ST-120, and you need to be registered for sales tax to use it.
This matters most for wholesale purchases and liquidation sites, which often ask for your sales tax ID before they'll waive tax. Use the ID that matches your current business entity. Liquidation marketplaces like B-Stock ask for the sales tax ID of the business that's buying. For me, after forming my LLC, that's the LLC's sales tax ID, not my EIN or the old sole proprietor's number.
A simple checklist
- Register for sales tax in your home state before selling directly.
- Turn on tax collection in Shopify for every state where you're registered.
- File every return on time, including zero returns and marketplace-only periods.
- Give suppliers a resale certificate for inventory purchases.
- Once a year, check your direct sales into other states against their thresholds.
- Update your registration when your business entity changes.
Questions people ask
Do I have to collect sales tax on Amazon or eBay sales?
Generally no. Every state with a sales tax has a marketplace facilitator law, so Amazon, eBay, Walmart, Etsy, and TikTok Shop collect and send the tax for sales on their platforms. Some states still want you to report those sales on your return as non-taxable marketplace sales.
Do I have to collect sales tax on my Shopify store?
In your home state, generally yes, once you're registered to collect there. In other states, only after you pass that state's economic nexus threshold, often $100,000 in sales into the state in a year, though some states use higher thresholds or transaction counts.
What is economic nexus?
Since the 2018 South Dakota v. Wayfair decision, states can require out-of-state sellers to collect sales tax once they sell enough into the state, even with no physical presence there. Each state sets its own threshold.
What is a resale certificate?
A form you give a supplier so you don't pay sales tax on inventory you'll resell. You collect tax (or the marketplace does) when you sell it instead. In New York, it's Form ST-120, and you need to be registered for sales tax to use it.