If you will be selling books either in person or through your website, then the law says you are to collect and pay sales tax, unless you’re lucky enough to live in a state without sales tax.
And calculating sales tax is ridiculously complex, considering we are talking nickels and dimes here.
Even I hate it, and I am used to nit-picky forms.
While I can’t make the sales tax headache disappear, maybe I can make it easier for writers. I’ve hit the highlights below.
First Step – Register with your state.
In most states, you will need to obtain a Resale Certificate, sometimes called a Seller’s Permit or Vendor’s Certificate of Authority. A resale certificate is different from your EIN, ISBNs, business license number, or any other number. Welcome to the number-filled world of small business!
In California, register online with the State Board of Equalization. https://efile.boe.ca.gov/ereg/index.boe Each state has an equivalent agency. Many states issue seller’s permits online.
Before you apply, have the following information handy:
- Your SSN
- Your Driver License(s) or State Identification number(s)
- Email address (contact and business)
- Your business name
- Federal EIN for the business
- State Employer Identification Number (SEIN), if any
- Your North American Industry Classification System (NAICS) code (Use 511130, Book Publishing, or if you are publishing online only, use 519130)
- Standard Industrial Classification (SIC) (2731, Book Publishing)
- Bank Information (name and address)
- Name and account number of your merchant credit card processor, if you will be accepting credit cardsName, address, and phone number of the person(s) who maintains the books and records, if it’s not you.
- Your guesstimate of monthly sales of print book that will be handled by you directly (and not sales through Amazon, bookstores, etc.). Be humble here and keep it low. Otherwise you might have to put down a large deposit and file returns quarterly.
Some states require the certificate to be posted at the place of business, although no one is going to come into your home office to inspect your bulletin board. If you don’t post the certificate, then keep the original certificate in a safe place.
Nest Step — Buying and Selling Books
The good news: Once you provide a copy of your resale certificate or your certificate number to CreateSpace or other POD provider, you won’t have to pay sales tax on books you buy with the intent to resell. (For IngramSpark, the process is more complicated. They make you fill out a number of state forms.)
Only items purchased for resale are exempt from sales tax, namely copies of your book. Office supplies (paper, ink, etc.), computers, bookmarks, and business cards are subject to sales tax because you are using them, not reselling them.
If you buy books without paying sales tax on your purchase, and instead give the books away to reviewers and friends or submit them to contests, then you are required to report those giveaways as if they were sales to you at the wholesale price and pay use tax on each book. Use tax is the equivalent to sales tax but applies to items you use. To simplify your life, I suggest you pay sales tax to CreateSpace or another POD provider on copies to be given away.
The bad news: When you resell your books to your customers at book fairs and through your website, you may be obligated to pay sales tax to the state in which the transaction takes place, although you may charge the tax to your buyers. And you are required to fill out state sales tax forms and pay sales tax to your state.
How much is the sales tax? It depends on the location of the buyer. In many states, the tax rate varies by city and county.
Sales tax is based on the selling price of the item, not on net profit from the sale. If you sell a book at $12, but you bought it from your POD provider for $5, you pay sales tax on the entire $12, not on your profit of $7. You have to pay sales taxes even if your business operates at a loss.
What sales are subject to sales tax? It depends. If you sell print books in person, such as at a reading or book fair, or over the Internet to buyers in your own state, then by law you are required to pay sales taxes on the print books sold, although you may collect it from buyers.
Twenty-five states are now charging sales tax on digital downloads as well, so sales tax may apply if you are delivering your e-book or other content directly to buyers via downloads if you and the buyers are in a state that imposes a sales tax on digital downloads.
If you are filling Internet or telephone orders from a customer in another state, you may also be required to pay sales tax to the buyer’s state but only if you have a business presence (sometimes called a nexus) in that state.
What is a business presence? This is controversial. Some states have enacted legislation that requires large online sellers to collect sales tax even if the seller has no physical presence in the state. These laws are referred to as Amazon laws for obvious reasons. The rules are full of technicalities and always changing.
For most writers, you will be considered to have a presence in the state if you have a home there or are selling books at venues in that state, such as a conference or book fair.
NOLO Press has a site that purports to summarize the laws regarding Internet sales tax applicable to interstate transactions. Search NOLO Press 50-State Guide to Internet Sales-Tax Laws. I have not researched their links to each state’s laws, but it is a good place to start.
Also check with your state’s website. In California, the State Board of Equalization has dozens of publications regarding sales tax, and many are in Spanish, Korean, Farsi, Thai, and other languages. You can call the state agency and ask questions as well.
Yes, all this is ridiculously confusing.
Some common sense guidelines
- If you are selling books yourself from your home state to a buyer in your home state, then you pay sales tax at the rate applicable to the location of the sale, or if you are mailing the book, the location of the buyer. If I were to sell a book at a fair in San Francisco, I would collect sales tax equal to 8.75% of the selling price and pay it to the State of California with my annual sales tax return. If instead I shipped the book to the buyer in Los Angeles, the sales tax rate would be 9%.
- If you are selling books yourself at a conference or book fair out of state, then you pay sales tax on books that you physically hand over in that state. If you go home and ship books, then the interstate rules apply.
- If you are using PayPal, Square, or a similar service to process your direct sales, add sales tax to the purchase price. You are responsible for reporting and paying the sales tax collected.
- If the bookstore where you do a reading handles the sales to customers, then it is up to the store to collect and pay the sales tax. You don’t have to do anything.
- If you are selling through Amazon and online sites other than your own, they will collect and pay the sales tax. You do not have to do anything.
- If you sell your book for a flat amount, let’s say $15, write SALES TAX INCLUDED on the receipt. It will be up to you to figure out what portion of the $15 is sales tax. For example, if the applicable sales tax is 8%, then the breakdown for a book sold for $15.00 would be $13.89 for the book and $1.11 for sales tax.
- Many states are applying sales taxes to e-books and other downloads. Expect this trend to continue. Research the rules for your state.
- Shipping and handling charges are not subject to sales tax if they do not exceed your actual costs.
- Go to your local office-supply store and buy a receipt book that makes a carbon copy for each sale. Make a receipt out for customers, and make a receipt for yourself when you give away a book. Keep those receipts.
You will report your sales (including sales to yourself on books given away) on sales-tax returns filed quarterly or annually depending on the state. There are substantial penalties for failing to file returns (even if you have no sales) and failing to account accurately for sales. You are expected to maintain books and records of all taxable transactions for four years after your annual filing.
Would it be easier to pay the POD provider sales tax on books you buy so you don’t have to worry about calculating, collecting, and paying sales tax when you resell the books? No. If you pay the POD provider sales tax that’s based on a price of $4 a copy, but then you resell your books for $12 a copy, you are supposed to collect sales tax on the $8 markup and pay it to the state. I have no idea how many people actually comply with any of these requirements.
Ready to throw your hands up in the air? I don’t blame you. But keeping track of sales taxes is not as bad as it sounds . . . if you keep decent records. Hmmm, perhaps that will be the topic of my next post — Basic Business Record Keeping.
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This is VERY helpful. Thanks so much!
Very helpful. Confirmed what I thought – I’m not responsible for sales tax on sales by Amazon
I am so new to this business. I am placing my books in several bookstores in another state on a 70/30 consignment. They collect the tax at the time of the sale. I have filed my resale verification form with Create Space. I assume the tax I owe to Arizona (where I reside and do business) is only on the amount of income I receive monthly from the bookstores. This would not be a sales tax but an income tax. Am I understanding the process correctly? I do have a TPT in the state of AZ – not the state where the bookstores are selling. Thanks so much. This is so helpful.
Connie, My apologies for taking so long to respond. For some reason, my website stopped giving me notifications when I received comments.
If your book was sold on consignment through a bookstore, then the bookstore pays the sales tax and you may provide them copies you purchased from CreateSpace without paying sales tax.
Income tax will be calculated on an annual basis as gross sales less deductible expenses.
My gosh… I so needed to know this. I recommend your book all the time–it’s truly an essential for the author’s bookshelf, no matter if they’re self- or traditionally published. Thank you!
As a self-publisher through IngramSpark, if I don’t register as an LLC, can I use a name I made up for my imprint and business name? If I can, then:
Do I still need to register for a seller’s permit? If yes, When registering for a seller’s permit or Vendor’s permit, do I need to be registered as an LLC, or can the business name just be the one I put for my imprint? And last question (hopefully – ha!), is it okay to use the address of the school I teach at as my business address for publishing?
With IngramSpark, you may register as an individual with an imprint name or as an LLC. To keep it simple, just use your name and imprint name and avoid the LLC. But you will need a seller’s permit whether or not you operating under an LLC. The seller’s permit is for sales tax purposes, so it applies to every seller.
Regarding using your school’s address, you would need to check with the school. They may not want you to.
Wow!Thank you so much! I was assuming that because I pay tax when I purchase copies of my CreateSpace books, I wasn’t liable for collecting or paying additional sales tax. I also have had some of the same questions as Lisa North so I appreciate that help. She mentioned using Ingram but does the same apply if I publish through CreateSpace regarding the imprint? I’ve created a name/logo, but am not ready to become an LLC.
Laura, Yes, you may publish as an individual with an imprint name through CreateSpace. That is what I do with both CreateSpace and IngramSpark. The account is under my name, but my imprint and publishing name is Ten Gallon Press.
This is all confusing want start a website with my book sales on it but don’t know how to start or pay taxes when I have sales.
Pamela, Yes sales tax rules are arbitrary and non-intuitive. What state are you in? Perhaps I can point you to a helpful resource for your state.
Excellent blog. I’m definitely buying your book – but by walking into Barnes and Noble! I know that tax exemptions vary by state, but what about a non-profit that has a sales tax exemption in MO? Its primary mission is providing books, training and resources to under-served schools, with all literature from minority perspectives. It also offers those minority authored books for online sale on its website. Would sales tax on those sales be exempt, due to its approved sales tax exemption from Missouri?
Could be. You should check with the state agency that handles sales tax. I don’t know Missouri sales tax law.
Thank you for all this information. I self publish on Lulu (account under my name but with different pen name–published under) but just started a Shopify store and was so confused about taxes and what to do. I would normally just receive a 1099 from Lulu at tax time. Now I’m not sure if I need to file quarterly, obtain a DBA plus Cert. of Authority just because I opened up a store on Shopify, though it is connected to Lulu Xpress through an app with auto filling orders of books and shipped from them as well. I’m in NY state and books are shipped out of a different state–from Lulu…and Lulu charges taxes…they will now bill me for orders fulfilled through Shopify since the sales take place there. I just wasn’t sure if I still need to configure taxes and add them accordingly to every purchase.
Carolyn, Since your questions cover both federal and state tax issues, and perhaps even city tax issues depending on where you live, you will need to work with a local CPA or attorney to help you get set up correctly. I am located in California and don’t know NY tax law. Sorry I can’t help more.
Let’s say I’m a publisher in CA and ship hundreds of my books to my distributor in TN. Do I need to provide the manufacturer of my books (located in MI) a TN resale certificate?
You California resale certificate number should be acceptable. You don’t need one in TN.
Is it required to register in your home state and in the state where you sell books? (For instance, if home state is NY, but selling in FL.)
Brooke, it depends on whether you have enough of a presence in FL to create what is called a nexus. So if you own a home in FL, that could be enough. Also, if you physically sell and deliver the books in FL, that could be enough. Check the Florida Department of Revenue website. It has lots of relevant info.
This is very timely and helpful! I had no idea about paying the use tax on the giveaways. Question: we are in Texas and hold a sales and use permit here but have given away books in other states. Do we pay the use tax to the other states or only if the books were given away here in Texas? I’m confused by this. Thank you for your help!
Julie, the rules vary some state by state. If you are giving away the books, which means you are buying them from yourself, that happens in the state where you are at that time. That sounds like Texas.
When you are selling a book to someone else, and shipping it out of state, then you look at the state of the buyer and whether you have a business presence there.
Great article, it answered so many questions I had.
Hi Helen,
Thank you for this article. I’m not trying to be dense… I am an author who directly sells my books to the public a few times a year or less (less than 12) at book signings and fundraisers for causes. I purchase the books I donate from Amazon and pay sales tax on the cost of the books when I buy them for resale. I do not have an office I declare on my taxes. Do I need a sales tax permit? Also, an odd question perhaps – sometimes I sell books on behalf of the cause I’m raising money for. IE: I sell books to people attending a fundraiser. I paid tax on my cost of the book and pass the excess to the nonprofit (501C3) with their prior consent to raise money for them with my book. I just withhold that amount before giving them the profits. Would it be better to give them books and have them reimburse me the cost? Does it matter? Please advise. Thank you. PS. I live in NY.
Val, Sorry, but I don’t know NY sales tax law. You should discuss the question with a local CPA or you can probably call the state sale tax agency and get answers from them.
I do not have an Employer Identification Number which is required on the form to apply for a sales tax permit. Not sure what to do. This is all so confusing!
You should get an EIN. It’s free and easy. Do directly to the IRS website. Here’s a blog post about it. https://helensedwick.com/sell-your-book-not-your-identity/
Hi Helen
I’m a new author and have just received 100 copies of my first book. I am a complete idiot when it comes to all of the above. I am setting up a website where hopefully people will buy my book. I live in Texas. I am for sure going to sell copies to folks in Texas, Washington State, Wisconsin, Iowa and Minnesota. Some of the people who will purchase my books will be spending the winter months in Texas, where they have cabins or motor homes. What do I do?
Kathleen, You should consult with someone who knows Texas sales tax law, such as an accountant or the state agency that manages collections. Sorry, but I practice in California and am not familiar with Texas law.
Hi Helen
I am in the process have having my book designed and should be done in 4 weeks or so. I plan on using IngramSpark, Amazon and Draft2Digital. As I understand if I just sell my books on online sites such as these I do not have to worry about sales taxes but if I also want to sell my book in person I do need to add the sale tax. Is this correct? Also, am I correct that regardless if I just sell with the above online stores I need a Seller’s Permit? I have a Zazzle online store but I assume the reason I don’t need a seller permit is because they are a marketplace where they make the products and I just put on my designs. Is this right? Last question: Unless I start making big bucks I don’t need to be a business to sell my books or products.
Your feedback is much appreciated.
Thank you,
Hope
A resale certificate and a seller’s permit are the same thing. Different states use different terms.
You are correct that Amazon, Ingram Spark, D2D and other vendors collect and pay the sales tax when they sell the book. You don’t have to. However, Ingram Spark requires you to get seller’s permits in various states anyway, but you can download all the forms from their site. They walk you through the process. I would not be surprised if other vendors start doing the same. It takes a little time to fill out and sign all the forms, but does not cost you anything.
Hi Helen,
One more question, it seems like I need both a seller’s permit for the online stores such as Amazon etc and a resale certificate if I want to purchase my book to sale at events. Am I correct?
This article has been VERY helpful, but I can be a little slow. If i am self publishing and selling my book only on amazon, what is mandatory before im allowed to sell on that particular platform? There’s so many things I feel I need to apply for and I don’t want to make more work for myself than necessary. Please help me navigate the Amazon rules to being a book seller.
Amazon usually makes it very easy. But I would suggest you have a separate EIN (tax identification number) for your book business. If you are selling only through Amazon, you might not need a sales tax certificate. But their rules change from time to time.
Hi! Thanks for the information! If I order my own book from the publisher and then sell on my website and mail out myself do I charge the buyer the sales tax from where I live? I’ve already paid sales tax on the books when I bought them, do I subtract that from the sales tax on the resale price? I’m so confused.
Carrie, Are you working with an accountant at all? Your accountant would know the rules for your state and could help you get a resale number.
I just discovered your site. This information was what I was looking for and (scarily) more. Thank you! I appreciate it all so much that I just bought your book, too.
Hi Helen,
Thank you for your article.
I am operating from California. Right now I am setting up my website to sell my books. Do I collect a sales tax only if I ship my book to a California address? What if people buy from other states? My guess – i collect only from California customer. I also want to sell a pdf version of the book. In California there is no sales tax for pdf book. What if people buy from the other states?
If you are located in California, then you collect and pay sales tax only on the sale and delivery of the printed book in California. So far, in California, the sale of a PDF sent electronically is not subject to sales tax. That might not be the case if you were in another state, so readers – be sure to research the sales tax rules for your state.
What if I order my own book from IngramSpark for friends and family and am asking them just to pay the printing cost. I’m not making any money. Do I still need to collect sales tax?
No. If you are simply being reimbursed for your expenses, then that is not considered a sale.
Any thoughts on best accounting software to use for book publishers?
Sorry, I don’t keep up with the software world. I suggest something simple. Most accounting software has multiple features, 99% of which you won’t need. If the software if too hard to use, you won’t keep up with it. Keep it simple.
I was wondering, if I want to write a book and sell it on Amazon (an e-book) what would then be required? would I still need to get a sellers permit? Do I need to register for an LLC? I understand the sales tax would be taken care of so would I need to do anything for that. I just want to create something fun and be able to share it and just want to know what would be required to do this. -Thank you so much for your help, I really enjoyed your post on this!
Gianna, Look through my old blogs posts on setting up your business. My books also covers it in more detail.
Helen, I just discovered your site and blog and cannot thank you enough for your wisdom to the authoring masses! I am an American living and working overseas, and would like to keep my publishing earnings in the US tax system rather than where I am currently working. Do you have any insights on how to find an international tax advisor who knows publishing law, too? I heard I could do this with an s-corp, but don’t want to take someone’s word for it who isn’t a pro. Thanks for any insights you can provide.
Dear Thinking, Sorry, international taxation is outside my expertise. I suggest your talk to other ex-pats in your community and ask them if they know anyone who can advise you.