Tax Season for Online Sellers: How Can You Prepare for It?

Paying Taxes in eCommerce Businesses

The end of January marks the start of tax season, and it’s important to be prepared. Just like any physical retailer, online sellers must be ready to file their tax returns. Paying your taxes is extremely important, because your business could run into trouble with the IRS if you fail to do so, and that could lead to serious long-term damage. Within this guide, you will find everything you need to know about filing taxes.

Know Your Sales Tax Requirements

Writing Notes w/ Calculator

First and foremost, you need to read up on the specific tax requirements that your organization needs to follow. The most important rule regarding online sales taxes is that you must collect them from your buyers if you have some kind of physical location, or “nexus.” This can be anything from a warehouse to an office that you operate your business from.

Keep in mind that sales taxes are different among certain states, so you must be careful if you collect taxes from several states. Always be mindful of each state’s tax laws as well, since they can vary slightly. Also keep in mind that while most physical products have to be taxed, certain items cannot be taxed in specific states.

Seek outside help if you need help confirming this information.

Know the Tax Deadlines

Calendar

One of the most important parts of tax season is knowing when specific payments are due. Typically, taxpayers have to make their final payments by the middle of April, which is when Tax Day is. April 15th is Tax Day for 2019, so keep this date in mind so you do not forget about it. There are also a couple of other dates that you should be aware of. Forms 1099 and W-2 need to be filed by the end of January, and any partnership returns have to be sent in by March 15th. Make a note of these dates so you do not forget about them.

Organize Your Financial Information

Working with Calculator

To avoid major issues, you need to keep track of your income and your expenses so your financial records are up-to-date. It does not matter if you do your bookkeeping online or offline; you need to make sure your books are up-to-date with the correct financial information. If any of the information you present is false or out of date you could get into serious trouble with the IRS.

It is also important to keep track of all your receipts, since they detail any expenses your company has paid throughout the year. You can make it easier to keep track of these by scanning them onto websites like Evernote. This will let you have a record of them online, so you do not have to worry if you ever misplace one of your receipts.

With this information, you can identify your net income and figure out how much money you need to pay.

Know You Can File Extensions

It is important to know that you can file for a tax extension if you do not have enough time to meet the deadline for your tax payments. The process is simple, and by taking advantage of it you can get some extra time in case you are being pulled away from your taxes due to other priorities.

To file a tax extension, you must file a form that corresponds with the type or organization you run. If the form has been approved, you can get up to six extra months to send in your tax returns. Only use this if you are absolutely unable to finish your tax returns in time, and if you choose to use it, make sure you do not miss the new deadline.

Do Not Be Afraid To Seek Outside Help

Business Man Shaking Hands

If you are having trouble with your taxes, do not be afraid to seek help from a professional accountant. Even if you know how to file them, having an accountant can help free up time so you can work on other important tasks. Accountants around the country specialize in several different businesses, and they can help you file your taxes properly and keep the IRS off your back.

When you are looking for an accountant, make sure you hire one that understands the type of business you work in. You can also consult with professional tax advisors if you need help with a specific topic.

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Keep Driving Sales After the Holidays Conclude

Keeping a Steady Pace

The holiday season is a key period for online sellers, since this is when sales tend to peak over the course of the year. Thanks to an abundance of sales and marketing campaigns, most companies see major profits during this time. However, once this period ends things must go back to normal, and companies run the risk of suffering from a sales slump as a result.

Use these tips and tricks to drive sales after the holidays so you do not run into a slump.

Don’t Be Quiet After the Holidays

Typing on Laptop

One common mistake that online sellers make is being too quiet after the holiday season. At the start of the year, most sellers slow down a bit with their marketing campaigns. This happens because some marketers get tired from producing multiple holiday ad campaigns, and most shoppers start getting sick of seeing all the emails advertising holiday sales.

It is not inherently bad to slow down after the holidays, but it is not a smart move to go completely radio silent. Advertisements help pull in potential buyers, and if you stop with emails and other ads completely you could risk losing their attention. You do not have to go

crazy with ad campaigns, but it is important for you create new advertisements that target people who saved money to use after the holidays.

Try More Discounts

Shopping Discounts

Online shoppers are never tired of finding discounts, even after they have finished buying gifts for the holidays. People are always trying to find the best prices online, not just during big shopping periods. Adding to this, lots of people will want to break in the gift cards they received from friends and family over the holiday period.

It might be a good idea to offer discounts on your winter products during this time, because when spring rolls around it will be harder to sell them. This can help you clear out your old inventory so you can make room for new items later down the road.

It can be tiring to offer so many discounts in such a short amount of time, but if you are willing to go through with it you can retain a lot of holiday customers.

Introduce New Products

Shopping Bags

A smart way to keep consumers interested in your brand is to introduce some new products at the start of the year. If you do not think customers would be interested in discounts on your leftover items, refresh your inventory with some new products people might need for the rest of winter. While your competitors focus on restocking after the holidays, you can catch them off guard with new items that they do not offer.

New products entice consumers, and they can help you attract new customers while other sellers slow down after the busy shopping season. If you plan to start selling the new products in January, it is important that you promote these items while the holiday traffic is still high.

Market Around New Year’s Resolutions

New Year’s Fireworks

Another tactic you can try is to gear your products and advertisements towards people who are looking to fulfill their New Year’s resolutions. Most people like to let loose and have fun during the holidays, but when the New Year rolls around they start setting resolutions so they can better themselves. The key to success early in the year is to market towards people who have this mindset.

For example, some people like to start exercise programs after the holidays, so if you sell fitness items you should focus on advertising them. Try setting up a section of your site that focuses on items that will help people fulfill their resolutions. Shoppers want to get a fresh start for the New Year, and you can succeed by selling products that will help them do just that.

Give Loyalty Rewards to Frequent Customers

Your most loyal customers are some of your greatest assets, especially when sales slow down after the holiday rush. They are the source of most of your income, and if they are happy to shop from you they might recommend you to their friends. Therefore, you should definitely focus on loyalty rewards at this time of year so you can keep them invested in your brand.

At the start of the year, offer your most loyal customers some rewards, including discount codes and coupons. You might want to give them a couple of extras so they can give them to their friends. Not only does this keep your current customers happy, but it could potentially bring in some new customers as well.

With these tactics in hand, you can mitigate the slowdown in sales that typically starts at the beginning of the year.

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