Understanding Ecommerce Tax Obligations

🎯 The scariest notification isn't from your ad account. It's the one that starts with "Department of Revenue." Most DTC operators are laser-focused on the metrics that matter: CAC, LTV, conversion rates, and monthly recurring revenue. But there's one metric they're completely blind to: tax exposure. Here's what I see happening constantly: → Brands are selling in states where they should be registered, but aren't → Most discover this through penalty notices, not proactive planning → Finance teams are burning hours monthly on reactive compliance → The "surprise" tax bills can be devastating The silent killer isn't your acquisition costs or inventory management. It's the tax liability building up in states you didn't even know you were obligated to track. Kintsugi fixes this before it becomes a crisis: → Pulls all your sales + payment + shipping data into one dashboard → Tracks nexus thresholds across all 50 states in real-time → Files automatically so you never miss a deadline → Reconciles everything so your team isn't scrambling at month-end This isn't just tax software built by accountants for accountants. It's compliance infrastructure built by operators who understand ecommerce velocity. While your competitors are getting blindsided by tax notices, you'll be scaling with clean compliance from day one. The difference between reactive and proactive compliance? Usually significant costs and a lot of sleepless nights. Get started with Kintsugi >> https://lnkd.in/g-VRHzbS

Tariffs - yes, we are already sick of the whole topic. Logistics Managers, like me, are already getting grilled on options and will need to work closely with supply chain partners to work on viable solutions. Supply chains need to keep moving whatever current disaster we are now facing. Here are some of the questions that may come up with a brief answer: ❓ "Can we ship from a different country with lower tariffs?" Answer: Yes, we can ship via a different country but that doesn't change the country of origin. Tariffs are based on where the product was manufactured or substantially transformed, not where it ships from. ❓ "Can we reclassify the goods under a different tariff code to pay less duty?" Answer: Only if the reclassification is correct under customs rules. Misclassification can lead to penalties. However, we can double-check that our current HS codes are up to date and accurate. ❓ "Can we delay shipments until the tariff situation is clearer?" Answer: We can defer some shipments but this might affect stock levels, customer commitments or production schedules. I’d recommend a risk assessment per product line before we delay. ❓ "Can we switch to local suppliers instead?" Answer: That’s a good medium-term option. We’ll need to evaluate cost, quality, lead time and whether local suppliers can meet our volume and spec. ❓ "What impact will this have on landed cost and margins?" Answer: Tariffs will increase our landed cost. I can model the new cost structure per product so we can assess the overall margin impact. ❓ "Can we reroute shipments through bonded warehouses to avoid or defer duty?" Answer: Yes, bonded warehouses let us store goods without paying duty until they're released into the local market. That gives us cashflow advantages and flexibility if we re-export. ❓ "Can we pass the tariff cost on to the customer?" Answer: That's a commercial decision. From a logistics side, I can break down the tariff impact per unit or order, the commercial team will need to assess how and whether to pass that cost on. ❓ "Can we split orders to stay under tariff thresholds?" Answer: Some tariffs apply per shipment but many are per item regardless of order size. We’d need to check the customs rules per destination. ❓ "Is there anything we can do short-term to reduce the impact?" Answer: Yes. We can look at optimising load efficiency and consolidating shipments. Also, we can prioritise higher-margin items that better absorb tariff increases. What are the other tough questions you are asking or being asked right now? Let me know below 👇 #logistics #logisticsmanagement #tariffs #imports #exports #shipping

What’s the Potential Impact of the New Tariffs for Amazon Sellers? On February 4th, 2025, new tariffs on imports from China, Canada, and Mexico are set to take effect. These could reshape pricing, sourcing strategies, and profitability for Amazon sellers—but as we’ve seen in the past, tariffs can change based on policy shifts. Here’s what’s on the table: 🔹 Canada & Mexico: 25% tariffs on imports 🔹 China: 10% tariffs on all goods 🔹 Section 321 Rule Eliminated: No more duty-free imports under $800—bad news for Temu, Shein, and dropshippers Why does this matter? 70% of Amazon sellers’ COGS come from China. This tariff would cut directly into margins, increasing costs by about 3% on a typical $25 product. Tariffs on Chinese goods aren’t new. Since 2018, we’ve seen rates fluctuate from 15% to 25% on different categories. But this time, the difference is broad-based impact across all imports from China. So, what happens next? 💰 Absorb the cost or pass it to customers? 📦 Shift sourcing country? 🌍 Expand into international markets like the UK or Germany? This could be a major shift for eCommerce sellers, but there’s still uncertainty on whether these tariffs will stick. How are you thinking about this? Will it change your sourcing strategy? #amazon #internationalecommerce #amazonseller #tariffs

Understanding Nexus in US Tax: A Journey Through the Tax Jungle Ever felt like navigating through US tax regulations is like trying to solve a Rubik's Cube while blindfolded? Welcome to the concept of Nexus – the magical link that determines whether a state can tax your business. What is Nexus? Nexus, in tax lingo, is the connection between a business and a state that allows the state to impose tax obligations on the business. Think of Nexus as that clingy ex who won’t let go and keeps demanding attention (or in this case, taxes). Types of Nexus 1. **Physical Nexus**: - This is like the classic “I saw you, so you owe me” situation. If you have a physical presence in a state – be it an office, warehouse, or even a single employee – congratulations, you have Nexus. - **Example**: You set up a pop-up store in California for a week. The tax authorities now consider you a part of their extended family. #WelcomeToTheFamily #TaxTime 2. **Economic Nexus**: - Here, it’s more about the dollars than the physical presence. If your sales exceed a certain threshold in a state, you’ve got Nexus. - **Example**: You sold $101,000 worth of flamingo-shaped pool floats in Texas. Guess what? Texas now wants a slice of that float money. #FloatOnTaxes #EconomicNexus 3. **Click-Through Nexus**: - This one’s for all you e-commerce wizards. If a state resident refers customers to your website and you make sales, you might owe taxes in that state. - **Example**: An affiliate in New York links to your unicorn-themed merchandise site. Sales start rolling in, and so do the tax obligations. #AffiliateMarketing #TaxLink Why Should You Care? Ignoring Nexus is like ignoring that “check engine” light on your car – it’ll catch up with you eventually, and it won't be pretty. States are keen on collecting every penny they can, and the penalties for non-compliance can be hefty. How to Manage Nexus? 1. **Stay Informed**: Keep up with state tax laws. They change faster than fashion trends. 2. **Software is Your Friend**: Use tax compliance software. Let technology handle the headaches. 3. **Consult a Professional**: Sometimes you need a guide to navigate the tax labyrinth. #TaxProsKnowBest #AskAnExpert Final Thoughts Nexus might sound like a sci-fi term, but in the world of taxes, it’s all too real. Treat it with the respect it deserves, or prepare for a tax nightmare. Remember, in the tax jungle, it’s survival of the fittest. Stay sharp, stay informed, and may your deductions be ever in your favor. #TaxJungle #NexusNinja #StayCompliant

Well, the day has arrived, and a seismic shift in global e-commerce just hit U.S. shoppers... Tariffs will now be applied to all e-commerce packages entering the U.S. Since 2016, when the de minimis threshold was raised to $800, ordering from abroad became easy and tariff-free - growing exponentially. Country of origin? Whatever. Expansion of de minimus played a major role in fueling the growth of direct-to-consumer off-shore e-commerce models. Shein and Temu may be the biggest examples - innovating their supply chain to exploit this even further - but everyone from European and North American brands to marketplace sellers on Amazon and Shopify DTC "brands" benefited by marketing goods to American consumers at sharp prices - with hundreds of 777's packed with nothing but cargo arriving in the U.S. everyday from China alone. That ended Friday. (*It ended in May for China-originating goods, but today ends for goods from everywhere.) 🚨 Now, every package shipped from overseas faces duties entering the U.S., adding 30–60% to prices for many goods. The impact? > International brands are halting U.S. sales or scrambling to move inventory U.S. stateside. > Carriers like FedEx & UPS must collect duties, often leaving U.S. consumers with surprise bills. > Consumers face higher costs, fewer choices, and frustration. The implications? Beyond the inflation and consumption implications (I will leave that to the economists), we are likely to see: Consolidation. Amazon, Walmart, and other large scale retailers and brands will benefit, while smaller brands and sellers leveraging de minimus loose. With their pricing power, supply chains, and U.S.-based logistics and fulfillment, the largest will capture even more share, able to shield customers from tariff shocks while raising prices. Marketplace models will take a hit, no longer fueled by cheap off shore goods. A renewed emphasis on "mid-market and above" in commerce and marketing tech. Smaller DTC brands and sellers will struggle, a key strategy eroded. As cross-border friction rises, more consumers will default to “safe, predictable” platforms that guarantee fast delivery and clear pricing without any nasty surprises. SMBs will be at a massive disadvantage, again. This will have implications for platforms and commerce tech catering to SMBs - many of whom had de minimus related strategies at their core. Like many, I called for rethinking of de minimis back in early 2024 as a way to stem the erosion of American retail and "fast-fashion, knock-off" brand erosion. It was out of hand. But the implications of this wholesale approach, eliminating de minimis for goods entering the U.S. from everywhere are significant and may well weigh on the economy in a host of ways - impacting the consumer and SMBs most especially. 

🔍 VAT in marketplace selling – an underestimated risk factor? Anyone selling internationally on marketplaces knows the pain: different VAT rates, new EU rules, OSS procedures, platform responsibilities. Sounds dry – but it’s crucial for margin, pricing, and scalability. 👉 In our latest article – including a full overview of all VAT rates in the EU (plus the UK and Switzerland, check it out here: https://lnkd.in/dprFpRsk) – we teamed up with our partner Taxdoo to show what cross-border sellers need to know in 2025. Here’s a preview of the 5 key points: ✅ 1. OSS can simplify things – but only with the right strategy The One-Stop-Shop (OSS) allows you to report all EU B2C VAT centrally via your home country. Sounds easy – but OSS doesn’t apply to B2B, to inventory stored in other EU countries, or to all types of services. If you get this wrong, you’ll end up right back in reporting chaos. ✅ 2. Marketplace = VAT responsible? Not always. Marketplaces like Amazon, eBay or Kaufland are only liable for VAT in certain cases – e.g. non-EU sellers or imports under €150. In most other scenarios, the seller remains responsible. And even when the marketplace collects VAT, you’re still responsible for showing the correct gross price. ✅ 3. The wrong VAT rate can be expensive Charging 19% instead of 25% – or applying the standard rate instead of a reduced one like 5.5% – can cost you. Either you’ll owe VAT retroactively, or your prices will be too high to stay competitive. VAT mistakes aren't minor accounting errors – they’re profit killers. ✅ 4. New EU VAT rules from 2025 bring opportunities – and duties Since January, EU countries can introduce two new reduced VAT rates under 5% – a possible pricing advantage. But at the same time, VAT breaks for environmentally harmful products will phase out. Sellers should regularly reassess their product range from a tax perspective – especially in electronics, automotive, or energy. ✅ 5. It’s still a patchwork – despite the EU framework There’s little harmony here: Kids’ clothing is taxed at 0% in the UK, Denmark has no reduced rates at all, and in France, books are taxed at 5.5%. Selling across borders means you need solid tools, expert advice – or airtight internal tax processes. 💡 This shows: VAT isn’t just a bookkeeping issue – it’s a strategic lever (or stumbling block) for profitable marketplace growth. If you want to scale internationally, your tax setup needs to be bulletproof. 👉 Full article with all examples and practical advice here: https://lnkd.in/dprFpRsk What’s your biggest VAT headache in cross-border selling?

Why Indonesia's E-Commerce Tax Withholding Could Change Everything for Southeast Asia Think it’s just another tax policy? Think again. Indonesia’s new 0.5% withholding tax on SMEs could set the stage for a seismic shift in Southeast Asia's digital economy — from e-commerce to AI, blockchain, and fintech. This regulation is a wake-up call for an entire ecosystem on the brink of rapid digital transformation. ⚖️ Why Does This Matter? Indonesia is positioning itself as the region’s leader in digital formalization, but this policy could have far-reaching consequences. While Vietnam, Thailand, and the Philippines are testing the waters, Indonesia’s bold approach is about directly involving platforms in tax collection. As AI, blockchain, and Web3 technologies disrupt traditional business models, this tax strategy raises critical questions about how these innovations will be taxed—and whether the system can even keep up. 🌍 What’s at Stake Across the Ecosystem: 1. E-Commerce Platforms: Major players like Shopee, Tokopedia, and Lazada will bear the responsibility for managing this new compliance—adding costs and complexity to their operations. 2. SMEs: While the goal is fairness, many SMEs lack the resources to navigate this new compliance landscape—leading to potential slowdowns in growth. 3. AI & Automation: As AI increasingly powers e-commerce, the question becomes: Where does the value created by AI fit into the tax equation? 4. Blockchain & Web3: These decentralized platforms don’t rely on traditional intermediaries, making it difficult to implement tax rules effectively. 5. Fintech: Cross-border payments will become more complicated, requiring fintechs to adapt to new international tax regulations. 💥 Looking Forward: This policy isn’t just about tax — it’s about how Southeast Asia defines its digital future. Will innovation be stifled by new taxes, or will we see the region lead the way in creating a tax framework that balances growth with compliance? Indonesia’s success or failure will shape the future of the digital economy in SEA. 🌟 So, Who Cares? For the innovators and businesses driving Southeast Asia’s digital economy — you should care. The framework set today will determine whether the region can continue to thrive and innovate in the face of new challenges. The real question: Are we ready? Disclaimer: This analysis is based on publicly available information as of July 2025 and is for informational purposes only. Businesses should consult with tax professionals to understand the full implications of the proposed regulation. #DigitalEconomy #EcommerceTrends #FintechInnovation #BlockchainTechnology #AIinBusiness https://lnkd.in/gXpTUDNU

Pricing transparency around tarrifs just became a corporate minefield and major retailers are rethinking how they display cost factors at checkout: Some specialty retailers are embracing full disclosure: • Amazon considered displaying tariff fees on its Amazon Haul marketplace • Temu has already started explicitly showing tariff impacts • Niche brands like Dame are adding specific "tariff surcharges" • Jolie Skin Co is building dedicated software to display tariff fees • Electronics manufacturer Crestron is implementing a 12% fee to offset costs Companies must now decide: 1. Absorb tariff costs (reducing margins) 2. Raise prices silently (risking competitive disadvantage) 3. Add explicit surcharges (potentially impacting conversion) My takeaway: Price transparency is rapidly becoming not just a business strategy, but also a political stance in an increasingly charged environment. As global import fees and supply chain costs continue to shift unpredictably, the way companies choose to communicate these changes will significantly influence consumer expectations and market dynamics.

Most business owners overpay taxes—not because they have to, but because they don’t know better. Every year, I see entrepreneurs losing lakhs simply because they aren’t aware of tax strategies designed to help them save. The best part? These strategies are 100% legal and used by the smartest business owners to optimize their tax outflows. If you’re a business owner, read this carefully—it could save you serious money. 1. Choose the Right Business Structure Your legal entity matters more than you think. Sole proprietorship, partnership, LLP, or a private limited company—each has its own tax benefits and drawbacks. The right structure can reduce your tax liability significantly. A sole proprietor might pay taxes at individual slab rates, while an LLP or Pvt Ltd company may offer better tax efficiency depending on revenue, compliance costs, and future growth plans. The key? Get expert advice and choose wisely. 2. Claim Every Business Expense Possible One of the biggest mistakes small business owners make is not claiming all eligible deductions. If it’s a business-related expense, it’s tax-deductible. Office rent, utilities, internet, software, employee salaries, marketing expenses, travel costs for work, depreciation on equipment—the list is long. Keep proper records and claim everything you legally can. You’ll be surprised how much this one habit can save you in taxes. 3. Don’t Ignore GST Input Credit If you’re paying GST, you must claim input tax credit on business-related expenses. This reduces your net GST payable and can save lakhs every year. Many businesses either don’t know about this or don’t track their eligible credits properly. If you're paying GST on rent, advertising, professional fees, or software—get that credit back. 4. Use Presumptive Taxation for Simplicity & Savings For businesses with revenue up to ₹3 crore and professionals earning up to ₹75 lakh, the government allows presumptive taxation—a fixed profit percentage of revenue is taxed instead of maintaining detailed accounts. Businesses: Tax is calculated on just 6% of total revenue (if digital payments) or 8% (if cash-based). Professionals: You can declare 50% of revenue as profit and pay tax only on that amount. No detailed books, no audits—just tax savings and peace of mind. The truth is, tax planning is not just for big corporations—it’s for every business owner who wants to keep more of what they earn. In life, only two things are constant—death and taxes. We can’t avoid the first one, but we can definitely optimize the second. If this helped you, share it with a fellow entrepreneur who needs to stop overpaying taxes. Let’s build wealth the smart way. #taxsavings #businessgrowth #entrepreneurship #smallbusinessowner #taxplanning #financialfreedom #gst #incometax #wealthbuilding #taxstrategies #moneytips #businessowner #startupindia #ca #taxconsultant #savemoney #investmenttips #financialliteracy #finance101 #legaltaxhacks

When evaluating whether to structure a business as a company or a limited liability partnership (LLP), one of the key consideration is the manner in which profits are taxed when distributed. Consider the following illustration based on a profit of ₹1 Crore: 𝐈𝐧 𝐜𝐚𝐬𝐞 𝐨𝐟 𝐚 𝐂𝐨𝐦𝐩𝐚𝐧𝐲 (𝟐 𝐬𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝟓𝟎% 𝐞𝐚𝐜𝐡): Corporate tax @25.17% (22% + 10% Surcharge + 4% EC): ₹25.17 lakhs Profit after tax: ₹74.83 lakhs Declared as dividend to 2 shareholders: ₹37.415 lakhs each TDS @10%: ₹3.74 lakhs per shareholder Net dividend received by each shareholder: ₹33.67 lakhs Tax liability (assuming @30% slab) on ₹37.415 lakhs: ₹11.22 lakhs per shareholder (TDS will be adjusted against this liability) Post-tax income per shareholder: ₹26.20 lakhs 𝑪𝒐𝒎𝒃𝒊𝒏𝒆𝒅 𝒑𝒐𝒔𝒕-𝒕𝒂𝒙 𝒊𝒏𝒄𝒐𝒎𝒆: ₹52.40 lakhs 𝐈𝐧 𝐜𝐚𝐬𝐞 𝐨𝐟 𝐚𝐧 𝐋𝐋𝐏 (𝟐 𝐞𝐪𝐮𝐚𝐥 𝐩𝐚𝐫𝐭𝐧𝐞𝐫𝐬): Tax @30% + 4% cess: ₹31.2 lakhs Profit after tax: ₹68.8 lakhs Distributed equally: ₹34.4 lakhs per partner Exempt in hands of partners under Section 10(2A) of Income Tax Act Post-tax income per partner: ₹34.4 lakhs 𝑪𝒐𝒎𝒃𝒊𝒏𝒆𝒅 𝒑𝒐𝒔𝒕-𝒕𝒂𝒙 𝒊𝒏𝒄𝒐𝒎𝒆: ₹68.8 lakhs While this illustration captures the core domestic tax impact, several other factors also weigh in while structuring a business — particularly when foreign investors are involved. The choice between a company and an LLP can also have consequences on withholding tax obligations, repatriation of profits, availability of treaty benefits. Entity structuring is not merely a matter of incorporation preference - it is a strategic exercise that must align with tax efficiency, regulatory compliance, and long-term commercial objectives.