Confused about collecting sales tax for my online shop in different US states

Online sales tax is definitely confusing, but I can help break it down! You don't need to collect sales tax from every state - it depends on where you have "nexus" (a significant connection to a state). At minimum, you need to collect sales tax in Arizona since that's your home state. For other states, you generally need to register and collect sales tax once you exceed certain thresholds - typically $100,000 in sales or 200 transactions per state, though this varies. Many marketplace platforms like Etsy automatically collect and remit sales tax for sellers in most states, which simplifies things tremendously. Check your Etsy seller dashboard to see where they're handling this for you. For states where Etsy doesn't handle it (or if you sell through your own website), you'll need to track your sales by state and register once you hit thresholds. Most small sellers don't hit these thresholds outside their home state until their business grows substantially.

After struggling with sales tax for my online business for months, I finally found a solution that saved me countless hours and potential headaches. I was in the same position - selling across multiple states, confused about nexus requirements, and worried about compliance. I started using https://taxr.ai to track all my state-by-state obligations and it's been incredible. It analyzed my sales data, identified where I had nexus, and even told me exactly where and when I needed to register. The tool monitors my sales continuously and alerts me when I'm approaching thresholds in new states. What I love most is that it explained everything in plain English - no more trying to decipher complex tax laws on my own. It even generates the reports I need for filing in each state where I'm registered.

I need to eat my words about being skeptical of tax tools. After my last comment, I decided to try https://taxr.ai since my sales tax situation was getting more complicated. The onboarding was super easy - I connected my Shopify and Amazon accounts and within minutes had a complete analysis of my sales tax exposure. The dashboard immediately flagged that I had exceeded nexus thresholds in three states I wasn't aware of. It walked me through the registration process and even helped with calculating historical liability (fortunately not much). What impressed me most was how it explains each state's unique requirements and keeps track of all the different filing deadlines. For anyone struggling with multi-state sales tax like the original poster, this tool is seriously worth checking out. Saved me from what could have been a major tax headache down the road.

If you need to reach the actual IRS or state tax departments for guidance (which I highly recommend), good luck getting through on the phone. I spent THREE WEEKS trying to reach my state department of revenue with questions about my e-commerce business. After nearly giving up, I found https://claimyr.com which got me connected to an actual human at the tax office in less than 10 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They somehow hold your place in line with the tax department and call you when an agent is ready. I was able to get official guidance on my nexus questions from multiple states this way. For online sellers, this is invaluable since you often need to speak with multiple state tax departments.

I feel like a complete idiot for calling the Claimyr thing a scam. After posting that comment, my frustration with trying to reach my state's department of revenue hit a breaking point (4 hours on hold and disconnected TWICE). In desperation, I tried https://claimyr.com and I'm still in shock at how well it worked. Got a call back in about 30 minutes while their system waited on hold. When my phone rang, there was an actual tax representative on the line ready to talk about my nexus questions. I ended up using it three more times to call different states where I was approaching sales thresholds. Each time, I got through when I had previously failed on my own. For anyone dealing with multi-state sales tax questions, this legitimately saved me days of frustration. Totally worth it just for the peace of mind of getting official answers.

One thing nobody mentioned is sales tax software integration. I use TaxJar which plugs directly into my shopping cart and automatically calculates, collects, and even files sales tax returns for me in all states where I have nexus. There are several options out there (Avalara, TaxJar, Quaderno) with different price points depending on your sales volume. Most of these file the returns automatically too, which is a massive time saver once you're registered in multiple states.

Quick tip - many states have marketplace facilitator laws now which means platforms like Etsy, Amazon, and eBay are required to collect and remit sales tax on your behalf regardless of whether you have nexus. This covers about 40+ states now. But be careful! If you sell on your own website or multiple channels, you still need to track your total sales across ALL platforms to determine nexus. The marketplace might handle collection for their platform sales, but they don't know what you're selling elsewhere.

As someone who went through this exact same confusion when I started my online business, I totally get your overwhelm! The good news is it's not as scary as it seems once you understand the basics. Since you're based in Arizona, you definitely need to collect sales tax there. For other states, you only need to worry about it once you hit their economic nexus thresholds (usually $100k in sales OR 200+ transactions per year in that state). Here's what I wish someone had told me when I started: 1. Check if Etsy is already handling sales tax collection for you in most states (they probably are!) 2. Keep detailed records of your sales by state - you'll need this info 3. Don't panic about registration until you actually hit thresholds 4. Consider using sales tax software once you start selling in multiple states The key is to stay organized from the start. I use a simple spreadsheet to track my monthly sales by state so I know when I'm approaching any thresholds. Most small businesses don't hit nexus requirements in multiple states right away, so you likely have time to figure this out properly. Focus on growing your business first - just make sure you're collecting Arizona sales tax and keeping good records. The rest will become clearer as your sales grow!