Compliance support for online marketplaces

For US business owners and LLC founders selling via online marketplaces, understanding compliance is crucial. Marketplace facilitator laws are now widespread across most U.S. states, shifting the obligation to collect and remit sales tax on third-party marketplace transactions from individual sellers to the marketplace platform.

While this reduces the tax collection burden for marketplace sales, sellers still have obligations for non-marketplace sales and other tax duties. Economic nexus thresholds, which determine when a marketplace facilitator or remote seller must register and collect sales tax, vary by state.

Common thresholds include revenue-based triggers (e.g., $100k, $200k, or $500k) and/or transaction-count triggers (commonly 200 transactions). State-specific variations are significant, covering aspects like what constitutes a taxable transaction (e.g., tangible goods vs. digital goods/services), registration, filing requirements, and exemptions.

Beyond marketplace sales tax, sellers must manage multiple compliance areas, including income taxes, state registration/Certificate of Authority, product safety and labeling, shipping/customs for international sales, consumer protection rules (FTC), and ADA web accessibility.

Robust recordkeeping and returns retention are vital for audits. Data privacy, payment security, and fraud/KYC are also material compliance areas.

Although the U.S. lacks a single federal consumer privacy law, states like California, Colorado, Connecticut, Virginia, and Utah have enacted their own privacy laws that apply to businesses meeting specific thresholds.

Marketplaces and sellers must adhere to PCI DSS for card data and implement reasonable cybersecurity practices. Practical guidance for LLC founders includes confirming whether marketplaces collect and remit sales tax on their behalf, monitoring economic nexus thresholds, registering with state tax authorities when nexus is triggered, implementing clear written policies (terms of service, refund/returns, privacy), ensuring PCI DSS compliant payment processing, maintaining robust recordkeeping, and considering automation tools or professional tax advisers.

State-specific considerations, such as California's Department of Tax and Fee Administration (CDTFA) guidance and varying digital goods taxability, should also be noted.

For US business owners and LLC founders selling via online marketplaces, understanding compliance is crucial. Marketplace facilitator laws are now widespread across most U.S. states, shifting the obligation to collect and remit sales tax on third-party marketplace transactions from individual sellers to the marketplace platform.

While this reduces the tax collection burden for marketplace sales, sellers still have obligations for non-marketplace sales and other tax duties. Economic nexus thresholds, which determine when a marketplace facilitator or remote seller must register and collect sales tax, vary by state.

Common thresholds include revenue-based triggers (e.g., $100k, $200k, or $500k) and/or transaction-count triggers (commonly 200 transactions). State-specific variations are significant, covering aspects like what constitutes a taxable transaction (e.g., tangible goods vs. digital goods/services), registration, filing requirements, and exemptions.

Beyond marketplace sales tax, sellers must manage multiple compliance areas, including income taxes, state registration/Certificate of Authority, product safety and labeling, shipping/customs for international sales, consumer protection rules (FTC), and ADA web accessibility.

Robust recordkeeping and returns retention are vital for audits. Data privacy, payment security, and fraud/KYC are also material compliance areas.

Although the U.S. lacks a single federal consumer privacy law, states like California, Colorado, Connecticut, Virginia, and Utah have enacted their own privacy laws that apply to businesses meeting specific thresholds.

Marketplaces and sellers must adhere to PCI DSS for card data and implement reasonable cybersecurity practices. Practical guidance for LLC founders includes confirming whether marketplaces collect and remit sales tax on their behalf, monitoring economic nexus thresholds, registering with state tax authorities when nexus is triggered, implementing clear written policies (terms of service, refund/returns, privacy), ensuring PCI DSS compliant payment processing, maintaining robust recordkeeping, and considering automation tools or professional tax advisers.

State-specific considerations, such as California's Department of Tax and Fee Administration (CDTFA) guidance and varying digital goods taxability, should also be noted.