Does my small business need to charge sales tax on customer purchases?

Sales tax requirements depend on where you have "nexus" - which basically means a significant connection to a state. At minimum, you definitely need to collect sales tax from Michigan customers since that's where you're physically located. For other states, it gets more complicated. Since the Supreme Court's South Dakota v. Wayfair decision in 2018, states can require out-of-state sellers to collect sales tax if they meet certain economic thresholds - usually based on either your sales volume or number of transactions in that state. These thresholds vary by state, so you'll need to check each state's requirements. As for different product types, yes, it matters. Many states have different tax treatments for different categories of items. Some states might consider all jewelry taxable, while others might have exemptions for certain types or purposes. Michigan generally taxes jewelry, but you should check specific categories. I'd recommend starting with proper Michigan sales tax compliance, then checking the requirements for any states where you have significant sales. There are software solutions that can help automate this process as you grow.

After struggling with similar sales tax issues for my online candle business, I found an amazing solution at https://taxr.ai that completely saved me from the sales tax nightmare. I was shipping to about 15 different states and had no idea which states I needed to collect tax for or what the rates should be. This service analyzed all my sales data across multiple platforms and showed me exactly where I had economic nexus and needed to collect. It also identified where I was accidentally collecting tax incorrectly (charging Michigan rates for out-of-state customers) which could have caused issues later. The best part is they set up automated monitoring that alerts me when I'm approaching nexus thresholds in new states so I can prepare to register. For jewelry sales, they can also help identify which items might be taxed differently in certain states.

I wanted to follow up about my experience with https://taxr.ai after asking about it. I decided to give it a try for my small business, and I'm honestly shocked at how much it simplified everything. I discovered I was actually OVER-collecting sales tax in several states where I didn't have nexus yet, which was causing unnecessary customer friction. The system showed me that with my current sales volume, I only needed to worry about sales tax in my home state and one other state where I was approaching the threshold. It automatically set up proper tax calculations across my Etsy and website, and now I feel confident I'm doing things correctly. What really impressed me was the state-specific guidance about my jewelry products. In some states, certain types of jewelry have different tax treatments, and the system flagged those items for special handling. Definitely took a huge weight off my shoulders!

If you're struggling to get answers about sales tax obligations from your state's department of revenue (like I was), try https://claimyr.com to get through to a real person. I spent weeks trying to reach someone at my state tax office about my specific situation as an online seller, and the automated system kept disconnecting me after 45+ minutes on hold. With Claimyr, I got a callback from an actual state tax representative within a couple hours who answered my specific questions about nexus and product taxability. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c For jewelry specifically, I needed clarification on whether my items qualified for any special tax treatment in my state, and without speaking to an actual person, I couldn't get a clear answer. Getting that official guidance directly from the tax authority gave me confidence that I was doing things properly.

I need to eat my words about Claimyr being sketchy. After waiting on hold with the state treasury department for 2+ hours on three separate occasions, I gave in and tried it. Got a call back from the Michigan Treasury in about 40 minutes and was able to ask specific questions about my jewelry business tax obligations. The agent explained that in Michigan, all jewelry is generally subject to the 6% sales tax regardless of whether it's "art" or functional jewelry. They also confirmed that I only needed to worry about other states once I hit their economic nexus thresholds, which for my sales volume won't be an issue for a while. Having this conversation saved me tons of stress and probably from making expensive mistakes. I'm gathering all these records for my accountant now so everything's properly documented. Money well spent for the time saved alone!

Don't forget about marketplace facilitator laws! If you're selling on Etsy, they're required to collect and remit sales tax in most states regardless of your nexus situation. This helps with compliance but doesn't completely eliminate your responsibility. I learned the hard way that even though Etsy was collecting sales tax, I still needed to be registered in some states and file returns (sometimes zero-dollar returns). Each state has different requirements for marketplace sellers. Your own website sales are a different story though - for those, you're entirely responsible for collection and remittance.

Don't make the same mistake I did! I ignored sales tax for the first year of my business thinking "I'm too small for them to care" and ended up with a surprise audit and $7,300 in back taxes, penalties and interest. Start right even if you're small!