Understanding Sales Taxes For Your Shopify Business
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- čas přidán 21. 07. 2024
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See my interview with dropshipping expert, Scott Hilse...where we discuss, dropshipping, dropshipping nexus, dropshipping obligation, dropshipping sales taxes, ecommerce nexus, ecommerce tax saving strategies, llc vs s corp, hiring an ecommerce accountant, and much more.
• Dropshipping & Taxes: ...
See my interview with dropshipping expert, sebastian gheorghiu...where we discuss, dropshipping, dropshipping nexus, dropshipping obligation, dropshipping sales taxes, ecommerce nexus, ecommerce tax saving strategies, llc vs s corp, hiring an ecommerce accountant, and much more.
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I really appreciate your time and effort in helping to explain this topic! 🙂
Excellent presentation. Factual and to the point. Thanks so much.
Best video I have found. Thank you for the info!
Thank you for the video!!! We learn a lot with you! Thank you!
Thanks for the content - super informative and super helpful. Have a great day.
This was extremely helpful. Thank you
Thank you this was very helpful!
thank you sir, that's was a valuable information
Super helpful! Thank you bro
Excellent breakdown - thank you for taking the time to create and upload this video.
Happy to help!
Wow, one of the best ecomm-related videos I have seen in a while. Great explanation and info. Much appreciated, keep up the great work!
Happy to help sir!
Best video I’ve seen on sales taxes yet thanks for this amazing breakdown
Thank you and be sure to share this video with your peers!
Great video, clearly explained everything... I went through about 10 other videos before this (some which were more than double the length of this one) and I still had unanswered questions after it... your production explained everything I needed to know in a clear, logical and step-wise manner.
Boom baby. Happy to help.
Very informative thank you!
Very infomative, thanks!
wow im starting up a business and was getting nervous when i got to the sales tax portion. You broke it down perfectly! thank you!
Best of luck in your venture!
Nice video! Thanks for sharing this video with us. I like the video and it is very helpful for me. Thanks for sharing.
This is my first ever CZcams comment, but I felt that I have to say THANK YOU for this great overview!!
Thank you very much. I understand it much better. Its good to know that Shopify has that button. It makes it easier to do accounting and put the taxes on the for annual payment. Question, if you are a Religious Non-Profit how are taxes handled?
Thank you soooo much! ⭐
Thank you so much!
Thank you--this was so helpful. Can you do a video on resale / reseller certificates at some point please? I have one for my state, and it satisfied Printify and Shineon, but Printful wants a certificate for every single state, which is just confusing as hell to me. Thanks again!
This video is SO clear, thank you!!! I am a Print on Demand Shopify Seller. I live in Florida. By the end of this year I will have about 4k in shopify sales, shipped from about 3 different PODs (NY, CA, MI). Should I register in Florida before the end of this year and pay sales tax on my Florida sales only? I DO file income tax for EComm because of Etsy... TIA : )
How do you do print on demain can you guide me please
In your scenario, we would suggest registering in FLORIDA ONLY. Be sure to check in with your POD supplier though, because they may be charging you sales tax for your sales OUTSIDE OF FLORIDA and you may have an opportunity to gain some margin by getting TAX EXEMPT (RESELLER CERTIFICATE) status in those other states so that you no longer have to pay sales tax to your POD Supplier
@@ecomaccountants Thank you so much! I really appreciate your feedback! : )
Thank you!!!
you earned my sub, thanks!
Hope to continue bringing value to you
Appreciate the video, what about selling from the USA overseas? Thanks.
Very helpful
Great job
Such a Good informative video
Thanks! Be sure to share with your peers!
Hi Chris! Thank you for your videos. Extremely helpful. My “side hustle” business is registered in TN where I have ALL the inventory and where I ship it from. But, I am a resident of FL by choice. I spend time in both places and I have another job in FL. Although I go there often and a lots of my sells are to that state, I don’t keep any inventory there and I ship everything from TN. I don’t sell anything in person in FL, I just guide them to shop on my website. Do I HAVE to consider FL a nexus?
Generally speaking - yes. It seems like you have a physical presence in Florida and TN but every situation is different!
Although the video is very good I still feel a bit lost, just opened my own eshop and I’m trying to have all my ducks in a row and don’t mess up. Deff will rewatch
Super informative video and extremely helpful in understanding the basics!
Just a few clarifications/questions:
1.) Is there a way to find out if certain goods are exempt from sales tax, in certain states?
2.) Once you determine where you need to be registered to charge sales tax, you just flip the button in Shopify, and it automatically calculates sales tax for those states at checkout based on the customer’s location, right?
4.) Do you still pay each respective state’s sales tax when they’re due, even if you don’t meet their economic nexus threshold (sales volume vs. number of orders)?
1. Unfortunately you'd have to check the rules for each individual state to determine what goods are taxable vs exempt
2. This is correct!
4. NO! You only pay sales tax when you determine that you have nexus AND actually register with the state for a sales tax permit
@@ecomaccountants Thanks so much! So very helpful.
Just saw this:
“There is no sales tax obligation for the retailer if it has not established nexus in a state. However, if a retailer does collect sales tax in a state in which it is not registered to do so, that constitutes an illegal activity. Do not collect sales tax for sales in states where you have not registered to collect sales tax or established nexus.”
So does that mean that you only start collecting sales tax after you sell, for example, 200 products in Utah?
When do you register? As soon as you hit 200? What happens if you sell 210 products and you haven’t finished the registration yet?
Or can you register before 200? And if you do, do you only start collecting after 200?
Under technical nexus terms, 200 is when you register in most states (as an example). You’re not supposed to collect until you register. Regarding over/under collecting, you can pre register or retroactively register so timing should not be an issue so you can avoid the 210 vs 200 example you gave us.
Wow Thank You! This was so informative! How much are your sevices and should we aquire the sellers taxes per each state on our own or do you offer a service that does that for us? Besides that what service do you offer that is so a software like TaxJar. Please advise. Thank You
Mayra, our prices change over time, so feel free to reach out to us via our website or on social media to get a quote and/or apply for a consultation call.
On instagram you can find us @ecomaccountants
Our website is in this videos bio!
This is an amazing explanation. Just to be clear, if I'm using a print-on-demand service (Printful) with no physical nexus, and I'm very unlikely to hit 200 sales (per Nevada's threshold), I don't need to be collecting sales tax on the t-shirts I'm designing?
We don't have enough information to give you an EXACT answer, however if you don't have 200 sales transactions you won't likely need to register or collect/charge sales taxes.
If i have physical nexus in one state and economic nexus in another state does that mean i need to charge a customer taxes for both states if they live where i have economic nexus? For example, if i have physical nexus in California and it was 8% tax rate and i have economic nexus in Pennsylvania and the tax rate is 7%, and a customer in Pennsylvania buys something from me, do i need to tax them 15% and remit the taxes to each state accordingly?
The only question we can't find an answer to is do you COLLECT sales tax PRIOR to the thresholds that are crossed? Or do you ONLY pay for the amount AFTER that threshold is met? E.G. We have $300K sales in Utah, after the threshold of $100K is passed, we START to collect taxes on the $200K that was earned AFTER the threshold was passed. OR... Do we collect PRIOR to the $100K threshold and then ONLY PAY if we cross it?
that‘s a good question😅 did you find an answer to this?
@@MariaS533 Nope, never found an answer.. We found out that you only pay nexus or local taxes, so we will collect taxes in our state since we live and operate there. But we will NOT collect tax until we hit Nexus threshold for other states. That's only way we saw it... I guess we'll learn the hard way if wrong?
He answered that in a comment down below. 🙂
Sorry guys! You only have to start collecting AFTER the threshold is met AND after you are registered.
Wow, many thanks! What about a dropshipping seller that is located in EU and sells to USA? If we are below the two nexus thresholds we should only pay taxes in our country?
if you have no physical presence and you're below the two nexus thresholds in the US, Sales Tax (most likely) wont apply to you! Every state has their own rules which makes this complex, but you should be safe using the tests we discuss in the video!
Hello, I'm starting my ecommerce print on demand business (drop shipping) and I've only registered for sales taxes only in Florida since that's where I live. I've made no online sales yet. Do I need to register for every state to obtain a resales certificate before I launch my website? I'm worried that if I make a sale online and I don't charge tax, later down the line when I do hit the economic threshold for that state I will owe money.
If I don't need to worry about that now, when should I worry about it?
Thank you very useful. How does it work if you are selling from the outside the US, to US customers?
complicated question. It depends on a few items including whether you have a US business entity or physical presence in the US. Consider consulting with a professional.
It was nice video.. so you saying that if Total revenue is less 3 million in Shopify, then only apply sales tax Permit in ur state where LLC is registered. In my case it’s Michigan. So collect sales tax and remit sales tax in Michigan only? I m planning to do dropshipping in Shopify. Please advice.
No my friend. Re-watch the nexus part of this video. Disregard where entity is registered, focus on where the business has physical presence.
So we dont charge sales tax for outside states unless we reach the threshold for those states, right? Once we reach the threshold, do we have to work backwards and pay the taxes for the threshold of 100k or just moving forward pay taxes on future sales? Thank you.
Moving forward AFTER you meet economic nexus. Don't forget that you have to register first!
I still don’t understand! Do I pay sales tax in Florida for a sale that I made to a customer in Georgia and what if I pass the threshold for Georgia. Do I pay sales taxes for Georgia as economic nexus and to Florida as a Physical nexus!!!! Doubles sales taxes?!!!
As mentioned in the video Sales Tax is a DESTINATION BASED TAX. In other words, if you live in Florida but ship to Georgia, the transaction is taxable in Georgia and is not taxable in Florida.
What if I am from Mexico, live in Mexico, and I have a lot of sales in the United States passing the threshold in some states? Do I need to register and get a tax permit in those states being a Mexican business?
Same principles apply to you! The only difference is that you have no physical presence in the US
@@ecomaccountants Since she has no physical presence in the United States, is she required to pay federal taxes? What if your physical presence is in Puerto Rico?
if my physical nexus is Texas, and will definitely not be in the $3m threshhold at the beginning or even the 200. Does it mean I only pay sales tax in Texas for those customers who are from Texas? But still collect sales tax for all customers?
No. To further clarify, you should ALWAYS register for sales taxes before collecting sales taxes. In your example, you should register and collect from Texas ONLY. In all other states you should have Sales Taxes turned off.
The United States has over 50 states. Do I need to apply for a sales tax ID in each state?
Unfortunately yes, however be sure to watch the video in its entirety because you may not need all 50 states. You may not even need anywhere close to it.
How can I just ignore sales treshold if I am not over xxxx€ in revenue ?
This is definitely not a fully technical answer, but a solution for entrepreneurs in their beginning stages that are trying to grow and not have to spend alot of money on accounting services or advice
This doesn’t apply to non us citizens doing Shopify out of the U.S correct?
This does apply to NonUS citizens if you are shipping into the US. Especially if you have a US entity (LLC or Corp)
What are your risks specifically? - 1:03
A True Ecom Accountant's advice - 1:10
What are Sales Taxes? - 1:21
Sales Tax on a $20 Shirt - 1:57
What happens to the Online Sellers? - 2:56
Wherever you are Shipping a Product, That is Where the Risk is - 3:20
Where do I Need to Comply with Sales Taxes? - 4:07
What is B Economic Nexus? - 6:52
Key Indicators of B Economic Nexus - 7:05
The Review of the Shopify Notification - 8:12
What are your Risks Specifically? - 11:05
Sales Tax Permits - 16:03
Hello! I understand how sales taxes works so much better now. I did not launch my store yet but I am from Pennsylvania so I have a sales tax permit in my state and have an EIN number. You said on Shopify that if state sales tax is turned on we still need to remit the taxes. Do we remit them using the use tax laws with notice and reporting requirements? I did some research on this but am very confused. This would be a great topic for a video. Could you please tell me if I sell even just one product to an out of state customer do I need to put a message on my site about customers need to pay use tax? Is this in every state? Look forward to hearing from you. Very appreciative to any advice. Happy Holidays!
If you call the state of PA they can walk you through how to file (Step by step).
Don't worry about out of state "Use Tax" in the beginning. Just focus on your growth and hire a nerdy accountant once your tax risk becomes much larger than just one customer! ;). Generally we recommend that you get an E-Commerce specialized accountant when your sales hit $50K per month consistently.
Hi Chris, Thank you for this informative video. How can I contact you discussing about business in US?
I'd suggest going to his website.
www.theecommerceaccountants.com
i feel like he made this complicated on purpose! "our clients. our clients" the fact that he keeps saying that is basically asking people to crawel to them and seek their help, when it reality it doesnt even need to be this complicated.
Hi Arii - it is very very complicated! We're doing our best to simplify these concepts for you to be able to understand them clearly. Please don't sleep on this as as e-commerce entrepreneur because it can be a costly mistake!
US is too complicated 😪
Wow you should REALLY get rid of the background music it is incredibly distracting to what you're saying
So you are advising ecommerce business owners to not pay taxes unless you make enough money in a certain state. I think you should pay the taxes anyways XD
Do you have any social media like instagram I can follow
follow both @ecomaccountant or @ecomaccountants
Hi Thank you so much for this video, very informative. We are an online business shipping from Georgia, USA. We don't seem to have any economic nexus (yet) with other states, Does that mean we should just collect remit sales tax for sales in Georgia?
Yes that is our suggested approach in the beginning. In our opinion, if you're under $3M in gross annual sales, your economic nexus risk is usually pretty low.