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Ecommerce Sales Tax

We are en e-commerce company & will be collecting sales tax from customers in nearly all 50 states. The software we're using is approx $25K per year. Should this expense be treated as COGS or G&A?

Answers

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I prefer G&A. You need to pay merchant fees to be an ecommerce company and can't charge your customers effectively without their fees, hence it is Cogs but sales tax is a compliance cost / jurisdictional revenue scheme just as income and real estate taxes. The software helps your company achieve compliance not sales.

Interested in what others think.

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