Consumer spending has shifted even more heavily from brick-and-mortar to e-commerce during the coronavirus pandemic. Many retailers are pivoting to e-commerce shops for the first time, and established online retailers are experiencing sizable growth.
U.S. e-commerce jumped 49 percent in April, compared to the baseline period in early March before shelter-in-place restrictions went into effect, according to new data from Adobe’s Digital Economy Index. Online grocery helped drive the increase, with a 110 percent boost in daily sales between March and April.
Online sales are absorbing the offline retail economy.
E-com businesses that are now facing an influx of sales have an amplified need for efficient tax planning. Starting now, they need to monitor changes in laws, and strategize with a professional.
Tax Planning Starts Now
To save on the amount of taxes your business must pay in the future, you must plan ahead. Reducing your 2021 tax burden happens through thoughtful steps in 2020, while you’re seeing an increased amount of sales.
First and foremost, as an e-com business owner, you have to understand why tax planning is so important. The most obvious reason is no doubt that you would be happy to pay less on your taxes overall. To do so, you need a solid plan in place, and such a plan can’t be strategized and executed in the short term.
One of the most important steps in tax planning for the future is staying up to date on current legislation. Since Wayfair in 2018 more than 40 states have followed through on previously announced plans to tweak their sales tax laws. The changes affected remote sellers (out-of-state sellers) and required them to charge sales tax subject to specific criteria in many states.
More information on how to strategize and reduce your tax burden available here.
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By Chris Rivera
May 27, 2020