For most farm-based products, you do not collect and submit sales tax in Kentucky. However, if you are selling non-food items, such as soaps, painted gourds, or other farm-related crafts, you must collect and remit sales tax. In Kentucky, you do this quarterly. What if you sell online, in other states?
Many small farm businesses plan to sell online and ship items across state lines, but keeping up with changing state laws can be challenging, with different sales thresholds, tax rates, and registrations. Many states have a minimum of 200 transactions or $100,000, and other states have different requirements or no sales tax at all. In addition, registering to do business in each state can be cumbersome and costly.
A possible solution is to sell through a third-party, such as Etsy or Amazon. Both are collecting and remitting sales taxes as required by the states for the goods that independent sellers offer on their websites. Since their business model is based on selling third-party goods, it was in their best interests to handle this for their clients. In addition, platforms can also offer discounted shipping rates for using their services, as compared to calculating shipping for each item. While using these platforms can make collecting sales tax and shipping a little easier, you still need to market your items online using social media platforms. Neither Etsy nor Amazon will do it for you!
Navigating online sales can be a difficult road. For more information on selling farm products online and to see if selling online is best for you, drop KCARD a line at (859) 550-3972 or email us at kcard@kcard.info.