Whether you sell online or at a brick-and-mortar store, sales tax is a fact for most sellers. And the worst part of it is that your consumers take a hit with rising sales tax rates.
To reduce the tax burden on the low-income class, New York sparked the modern trend of sales tax holidays (tax-free weekend) in 1977.
The first commodity to receive tax holiday benefits was clothing. And soon, this trend was accepted by most US states.
What Sparked Sales Tax Holidays?
Ohio and Michigan were the first states to introduce tax holidays in 1980. However, New York made it a modern trend to limit cross-border shopping.
The sales tax holiday gave hope to New York residents without reducing the overall sales tax collection for the year.
While sales tax holidays were introduced in the early 90’s, digitalization has taken full advantage of it. So much so that Amazon sellers offer massive discounts on sales tax holidays to boost their sales.
If you’re an Amazon FBA seller and want to boost your sales in the ta-free weekend, here are 7 things you should know.
Understanding Sales Tax Holidays
Each state has different cap rates for sales tax holidays, meaning if your product costs are higher than the cap, it won’t be eligible for the tax holiday.
The best way to counter this is by reducing your product’s selling price on Amazon FBA. For instance, if your product eligibility cap is $100 and its selling price is $105, consider cutting $5.
This will boost your sales and exit maximum inventory during the tax holidays. The $5 cut in the selling price may be more profitable than a hit on your pocket.
4 Things Amazon FBA Sellers Need to Know About Tax-Free Weekend
Running an Amazon business means you are free from the borders and global confines. And that translates into tax legislation because you sell from anywhere in the world to anyone in the world.
Most Amazon FBA businesses registered through Get Set LLC have chosen states with tax-free weekends on their product niche.
This may confuse you, but keep reading to understand tax holidays and how Amazon sellers can benefit from them.
1. Selling Out Inventory
Amazon FBA has its charm, but the e-commerce giant charges a hefty storage fee. In some cases, you might suffer heavy losses if your products aren’t selling as fast as they should.
Thanks to tax holidays, you can boost your sales and exit your inventory through discounts and other lucrative offers.
The best part of tax holidays is that neither you nor your customer has to pay a hefty amount to the government.
This encourages sales, and everyone tries to exit maximum inventory. You can use tax holidays to your advantage if you have a slow-moving product.
However, you must know which products are eligible for sales holiday discounts in your state. Here’s a visual depiction.
Consumers shift their spending based on discounts and tax holidays. As an Amazon FBA business owner, offering lucrative discounts during the tax-free weekend to boost your sales is in your best interest.
One way you can do that is by preparing for tax holidays in advance and sourcing eligible products.
This opens a new source of income for your Amazon FBA, where you sell most of what you source before tax holidays.
Sourcing sales tax-eligible products not only opens another source of revenue for your Amazon FBA but also gives you first-hand insights into a new market.
For instance, if you’re inclined to sell back-to-school supplies on your Amazon FBA because they have high sales, you can start this venture during the tax-free weekend to maximize your profit.
Yes! If you’ve shared the correct product tax codes, Amazon automatically adds sales tax to your products.
During the tax holiday season, Amazon automatically removes sales tax from the selling price. Therefore, you’re automatically offering a better deal without any additional discount.
Nevertheless, it’s always profitable to capitalize on sales opportunities and ensure high sales volume during spending seasons.
4.Register In The Right State
Choosing a state for your Amazon FBA businesses is a make-or-break deal.
If you enlist your Amazon FBa business in a state that doesn’t offer much for your product, you may end up consuming your advertisement and sourcing budget.
Working with an LLC registration partner like Get Set LLC gives you an edge over self-starters because you get insights into the market.
For instance, Florida offers one-year sales tax discounts on diapers and children’s clothes. If you register your Amazon FBA business in Florida, you can expand your product market into all niches that are under sales tax holidays.
Florida 2023 Sales Tax Eligible Products,
- Recreational supplies
- Energy star products
- Hurricane-hardened doors and windows
- School supplies
- Test equipment
The Right LLC Registration Partner
Having a business registration partner gives you a competitive edge over others because you don’t start from scratch. Instead, you have a team of locals who understand the laws and market of where you wish to launch your Amazon business.
With Get Set LLC, you can expect business registration counseling with your profit in mind. In addition, we tackle all the documents, including the hassle of registering your LLC.
If you’re looking for a reliable LLC registration partner with tons of insights on Amazon FBA and US states, register your LLC with us now!