Sales Tax for Creators Selling Physical Products
A plain guide to sales tax for online sellers who make physical products. Learn what nexus means, when to register and collect, and how platforms help.
Your first sale comes in, then fifty more, and a quiet question shows up. Are you supposed to be charging sales tax, to whom, and how much? For many creators, sales tax for online sellers is the part of a product brand that gets pushed to a someday pile until it feels scary. It does not have to be. This is general information, not tax advice, and every state writes its own rules, so for your exact situation you want a tax professional who knows the states you sell into.
What sales tax is and who owes it
Sales tax is a tax a state adds to most physical goods. The buyer pays it, but you, the seller, collect it at checkout and hand it over, so the money is never really yours. Forty five states and the District of Columbia charge a statewide sales tax. Five do not, and those are Alaska, Delaware, Montana, New Hampshire, and Oregon. The catch is that you do not owe sales tax everywhere just because you can ship everywhere. You collect it only in states where you have a connection the law recognizes, and that connection has a name.
Sales tax nexus in plain terms
Nexus is the link between your business and a state that makes you responsible for its sales tax. Physical nexus is the older kind. According to guidance summarized by the Sales Tax Institute, a tangible presence like an office, an employee, a contractor, a store, or inventory in a warehouse creates nexus. That last one catches sellers by surprise, because goods stored in a state, even by a third party fulfillment service, can create nexus there.
Economic nexus changed everything for online sellers. In 2018 the Supreme Court decided South Dakota v Wayfair, and the ruling let states require sellers to collect based on sales volume alone, with no physical presence. Every state that has a sales tax now has an economic nexus rule. The common threshold is 100,000 dollars in sales into a state in a year, and some states also count separate transactions, often 200. Providers like Avalara note many states are dropping the transaction count and keeping only the dollar threshold. Treat 100,000 dollars as a signal to check, not a national law.
Do I need to collect sales tax yet
For most creators just starting out, the answer is smaller than the anxiety. You register and collect in your home state, because that is where you have physical presence from day one. Beyond that, you do not owe tax in a state until you cross its threshold, and a brand doing its first few thousand dollars is nowhere near 100,000 dollars in any single far away state. The trap is inventory. A fulfillment network that stores your products in multiple states can create physical nexus in each of them well before your sales would, which is why this ties to how fulfillment and logistics actually work. When you do cross a threshold, register for a permit first, then start collecting, then file returns on the schedule the state assigns and remit what you collected.
How platforms and marketplaces handle it
If you sell on a marketplace like Amazon, Etsy, or Walmart, the marketplace usually collects and remits sales tax for you. This comes from marketplace facilitator laws, and every state with a sales tax now requires the marketplace, not the individual seller, to handle tax on sales made through its platform. Your own store is different. A platform like Shopify is not a marketplace facilitator. It is your storefront, so Shopify calculates the correct tax at checkout and reports what was collected, but per its own documentation it does not register you for permits and by default does not file your returns. The tool charges the right amount. You still own the registering and the filing.
Staying compliant without the panic
You do not need to become a tax expert. Know your home state rules, watch where your inventory is stored, and keep an eye on sales by state so you can see a threshold coming. Save the tax you collect so it stays separate from revenue in your head, because it was never yours. Once you sell into several states, bring in a professional who will register you and keep you current for a fee that is small next to back taxes and penalties. This connects to the rest of setting up a real business, from whether you need an LLC to sell products to how to price a product you manufacture.
Where No Logo fits
No Logo does not file your sales tax returns, and we would never pretend a manufacturer is a substitute for an accountant. What we do is take production, fulfillment, and customer support off your plate so the business side you own, including staying compliant, is the only operational weight you carry. We handle the making at a flat 25 percent production margin with no upfront inventory to buy, and you keep the brand and set the price. Oskar Flodstrom submitted a sample, we manufactured it, and his brand erik oskr launched to serious revenue in its first weeks, which you can read in Oskar's story. He got to run the business and be an artist, not also become a factory.
When you are ready, start a project with the team with no commitment. And for the specifics of your own situation, talk to a qualified tax professional. This piece is a map, not a ruling.
