The majority of individuals associated with ecommerce business have heard about the new terminology of MFA, the acronym for Marketplace Fairness Act or the Internet Sales Tax Act. MFA implies the latest bill passed in United States Senate and will come in front of the United States Representatives’ house very soon.
If the house passed this act, MFA will mandate every ecommerce retailer involved in selling more than 1 million dollars yearly in states, where they do not possess physical presence to collect related sales tax and make payment of taxes to each of the customers’ state and localized government.
How Ecommerce Businesses Can Prepare for MFA
So what will the passage of the MFA mean for small businesses and ecommerce operations? Brick-and-mortar stores will less be impacted as they already need to collect sales tax on in-store purchases as and where required.
For ecommerce stores, the impact will depend on the final form of the legislation. It will likely be phased in over time, and there may be annual revenue thresholds that apply. Businesses that want to prepare should begin looking at affordable software solutions available now to handle sales tax compliance. Here are some tips on choosing the right one:
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Find a fully automated solution
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Ecommerce businesses should take steps to find out a completely automated solution capable of handling each faucet associated with the collection of online sales and procedures involved in remittance of tax. Make sure it can file returns and not just calculate taxes. Don’t be lulled into thinking you’re in compliance just because you’re calculating taxes.
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Integrate the solution with existing shopping cart & Accounting software
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Next, Look for a solution that integrates with existing shopping cart and accounting software to streamline transactions and record-keeping. You should never choose any solution that fails to differentiate among various tax rates applicable to different types of products prevailing in the market.
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The solution should be certified from the revenue department of states
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Make sure the solution is certified by the states’ departments of revenue, so you know that state auditors feel comfortable you’re using accurate rates and rules, and you aren’t just relying on the word of the salesperson.
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The solution should maintain an Audit trail
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Lastly, Ensure that the chosen solution maintains an audit trail and can address state questions and issues.
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The Bottom Line on the MFA
Ready or not, the MFA will almost certainly become the law of the land, and likely sooner rather than later. The impact on brick-and-mortar stores without significant ecommerce operations will be minimal; they’ll have to comply with state tax collection just like they always have.
But small to mid-sized ecommerce operations should get ready in advance to minimize the impact on their operations. The key to that will be to find a tax compliance company that will act as a partner, not just a service. With a comprehensive solution in place, small to mid-sized eCommerce companies can continue to thrive and grow while fully complying with sales tax collection, remittance and filing obligations.
Get started with Builderfly – the most comprehensive ecommerce solution through which you can easily calculate your taxes and maintain audit reports in the most accessible manner. Builderfly is regarded one of the best ecommerce platform for small business, medium sized ecommerce businesses and large corporations.
