Yes that's right. The reason why it's so complicated is because the political prostitutes try to make it look like they're doing something. Not only that, they always want your money.
Flat 7.475% tax. Collect on everything pay to one government office who gives it to the states items were sold to who in turn devieds it to localities. In my city, we have about 15 tax locations or districts its split into 3 counties you do the math but how many locations are in each state, how many cities whats the local tax liability, how many states? You might think a computer program, but one vote can make it outdated. Its too much shit to deal with for a small business and difficult at best for a large company like Amazon. Flat tax. Register with just them And let retailers do what they do best Makes sales and ship products.
@@bobbg9041 I’m in California and last time I checked we have over 200 individual county tax rates. Then there are individual city/town tax rates. As a new business just starting out I honestly have no idea where to start I can’t seem to find an easy to understand way to deal with all of this!
Liked & Subscribed - Got turned on to you by our bookkeeper. We're swimming in nexus questions- why is this so hard!!!?!?!? Ok, I"m reading the PDF and will click on all the links and watch as many vids as possible. Then I'll reach out to you for help! Thank you for creating and sharing this content - super helpful and very supportive.
Take ownership and learn that shit. No good in complaining about what school never taught us. Forget that rainbow fish and start learning what matters lol
this video and the comments anwsered a lot of my questions! I wasnt sure if i had to collect sales tax from each state and county but it seems like its only the place you are physically present in. If im correct , thank you for the info!
So if my extremely small business isn't hitting any of the "items sold" or "income" thresholds for the states, I only have to collect for the state I have nexus (live) in?
Yes, that is correct. Also keep in mind other ways you'd have "physical nexus". For example, if your inventory is stored in any other states, you have employees in other states, etc. This is usually unlikely for small sellers unless they use Amazon FBA.
First of all, very informative videos on the sales tax topic - best ones I can find on RUclips so far, well done and thanks! Now my questions: we are a small Canadian business that sells to the States through two channels: Amazon FBA, and Amazon MCF (Multi-chanel fulfillment) via our own website. Sales volumes are way below the $100,000 / 200 threshold for every state (so no economic nexus?). BUT since we are using FBA and MCF we do use Amazon’s warehouses, which means we still need to register and collect sales tax that we made on our website (MCF) in those states? Even though we just have, say, $5,000/year revenue in that state? Thank you and keep on the great work!
Great question. FBA can get a bit tricky. I suggest you download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. It will give you some great info on this topic. In the 1st section - Determine Sales Tax Nexus - it says, "All states, except, IL, NY, and AZ consider your stock held in an Amazon warehouse enough of a presence to create nexus in their state." So yes, because nexus has been created through FBA, you do have to register and collect on your website.
Hi, thank you for this helpful video! If I am starting a ecommerce business and shipping products from my own home in Massachussets, do I need to register and collect taxes from Mass? Do I have to keep track of my sales volume by state when I get bigger to determine my nexus one by one?
Yes, you'll need to register, collect, and remit sales tax for Massachusetts sales. Then you will want to track sales volume by state as you grow to determine your economic nexus. There still may be other ways you have nexus in states, but economic nexus is one of the most common.
Hi! Awesome video! Our business is registered in Maryland and we have a MD sales tax ID. But we also plan to package and ship orders from NY. Do we need to register for a sales tax ID in NY as well? We’re just starting and the business is very small so we’re just a bit confused. Thanks for your help!
I believe you do since that would also count as a physical nexus. I would talk to your accountant to make sure you're doing everything correctly from the start. I'm in the same boat as I'm starting up an online shop and will be drop shipping a few items from another state. Good luck!
Thank you for the very informative video! I have one question: say I have physical nexuses in both Michigan and Maryland and no other economic nexuses, do I only have to collect sales tax towards Michigan and Maryland customers, using the sales tax rates in those respective states?
Hello! Thank you for your videos. Extremely helpful. I have another question: 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?
I would say yes because you are physically located in FL, especially if you file income tax in FL, they would already have your information and know about your side hustle.
If I have an online business in California from home and will be shipping from California to other states. Do I have to charge taxes for the states I ship to?
Hi Herman. If you do not have nexus in these other states, you don't need to collect sales tax. Just make sure to watch economic nexus thresholds. When you reach a certain number of sales in states you ship to, then you'll need to start collecting in those states: ledgergurus.com/blog/ecommerce-sales-tax-and-economic-nexus/
Thank you so much for your helpful and informative videos! I'm just starting an online, e-commerce business and do not have a warehouse or physical presence. I'm re-selling retail products. I live in CA, and will only be selling to CA residents. Do I need to have a seller's permit, and do I need to collect sales tax? If I need to collect sales tax, should I set my sales tax rate to CA's tax rate? Your advice is greatly appreciated.
Yes, because your business is based in CA, you need to register and collect sales tax in CA. If you want more information, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. It's full of useful tips. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi LedgerGurus - Thank you for this amazing video! And thank you for taking the time to answer our questions! I have a very simple question: I'd like to start an ecommerce website in Illinois. I will work from home (no real office). I'm NOT planning to be an LLC, Corp, etc. Just a person selling their stuff. I will have just a few items to sell to start with (no "warehouse" in the house). My customers will hopefully be from all over the US. Now, do I have to register in Illinois and get my tax ID right away? Even BEFORE I sell a single item because I live here and even though I don't have an office? Or do I register AFTER I meet the Illinois economic thresholds? Also, by "registering and getting tax ID", does that mean I (a person) will become a business (an LLC, a corp, partnership, etc)? THANK YOU SO MUCH AGAIN!
Yes, you do need to register for a sales tax permit in IL because you have a physical presence there. Your business is based in your home, but it is still physically in IL. The IL economic threshold is only for those who do not meet the physical nexus rule. And no, you'll still just be a sole proprietorship after registering. By the way, you really need to watch our recent video on IL sales tax laws changes - ruclips.net/video/eROXxrTZPps/видео.html. You can also read our blog about it here - ledgergurus.com/illinois-sales-tax-explained/. These changes WILL affect the way you remit sales tax going forward, no matter what size your business is.
Hello, great information shared! We plan to operate from EU with a a company settled here and sell in the US. If we consider we are going to be a B2C we do not have to charge VAT, but we have to collect sales tax from each state's citizen differently or collect sales tax with the nexus with our print provider?
The location of your print provider should not create nexus. Since your business is registered and based outside the US, you likely won't have nexus in any states until you start to hit economic sales tax thresholds. If you are approaching $100K of annual sales in a state and/or 200 transactions, then you should look into their economic nexus laws. Also, if you have any employees or inventory held in the US, you would have nexus in the states where you have employees or inventory held. And therefore would need to register, collect, and remit sales tax for sales in those states.
So I wanna open an online boutique in Oregon, and theres no sales tax here, I would be shipping from my home. Do I just track my sales and if they ever get over 200 transactions or 1OO,OOO in a certain state I start to charge sales tax and have to register in that state? Or do you charge sales tax since day one. Thanks in advanced! Im very confused.
This is correct. Be aware that states do have differing thresholds of transactions and/or sales. But generally when you are approaching 200 transactions or $100K in a state, you'll want to check their economic nexus laws. When you do have sales tax obligations in a state, just make sure you register for a sales tax permit before collecting sales tax from customers. For more help, you can download our sales tax guide here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Thank you so much. Very informative video. 1- If the company that manufactures my product (which I'll be selling online) resides in a different state, does that mean I have nexus in that state? 2- Also, if the threshold is reached in one year, then I have to register with the state and start adding sales tax even if my revenues in the next year maybe less than the threshold I met on the previous year? For example, I made $150,000 in Arizona in 2020 in online sales, then I need to register and start charging Arizona's customers the sales tax in 2021 even if the total of my revenues from Arizona in 2021 is say $20,000. Is that correct? So, I have to charge sales tax after the threshold of a specific state is met in one specific year regardless if that threshold is kept in the subsequent years.
Hi Sarah, Here are the answers: 1. Location of manufacturer usually does not create nexus. 2. Yes, this is accurate. You can reevaluate at the end of next year and de-register the year following.
Thanks for this video. I’m about to start my very small online business. And I plan to sell worldwide because basically any one from around the world can click and buy. From the explanations you gave, 1. If someone buys my product from any of the US states I do not have to charge them for tax neither do I have to pay tax right as long as I have not hit the threshold ? 2. I will be operating from one of the Canadian provinces, let’s say Ontario for example, I only need to charge buyers for taxes in Ontario and not other provinces ? 3. Before one can charge a tax, you must have a legal permit to do so right ? so basically it’s not like you can just input 5 % for example of total price of good the customer bought because you know for example the province you operate from charge 5% tax 4. Does one need to register the business even though very small first before selling at all? Sorry for the many questions
Hi Mary, here are our responses: 1. That is correct. You most likely will only need to register and collect in states where you have a physical presence (inventory stored, where you are located, employees hired, etc) or where you have economic nexus (the annual sales or transactions thresholds) 2. This video only applies to US sales tax. We don't handle sales tax outside the US. 3. Yes, you need a legal permit. Any sales tax collected is the state's money. You are liable to remit that to the state, and therefore legally cannot collect unless you have a permit to do so. 4. Here's an article on the benefits of registering your business; www.oberlo.com/blog/how-to-register-a-business
This is so informative information. I filled out a form on your website to get more sales tax guidance for my Shopify website . I look forward to your reply. Thank you
@@OnlineIncomeSisStarHave you looked into our sales tax courses? They are specifically geared towards sellers like you. ledgergurus.thinkific.com/collections/sales-tax
This is such a great video! You are very helpful. Can you answer this question for me please? I am an product Ecommerce business in a destination state as my only nexus and I sell nationwide. Do I only do destination tax collection and remitting for my current state or all states that have destination tax designation?
You only need to register collect and remit sales tax in the states where you have nexus. In your case it’ll be your home state and other states if you pass their economic nexus threshold. Destination means the rate you are collecting should be determined by the ship to address instead of ship from address, it doesn’t have much to do with nexus :)
Hi there, Thanks for this informative and very detailed video; truly grateful for that! As of today, I don't understand how sales tax collection works at all. I was wondering if you could help clarify the following questions: 1. If I have not yet set up a US entity (LLC, S-corp, etc), how, if at all, should I collect tax? 2. I am in the process of registering for an LLC, and I was thinking about Wyoming. If I end up doing so, does that mean that I would just need to collect sales tax in Wyoming? Also, what if I would be managing this new business (LLC) remotely? Does it have any effects? 3. Aside from Taxjar (if recommended), is there any other automated software that simply does the tax collection for us? Thank you so much in advance!
Thanks for reaching out. These are some great questions. The first place to start with all this would be our free masterclass called "The Uncomplicated Truth about Sales Tax." You can find it here: ledgergurus.com/resources/sales-tax-masterclass/ Next, your questions: 1. You need an FEIN to register or an ITIN (if you are a foreign seller). 2. Yes, that will create physical presence in Wyoming, even if you manage it remotely. 3. Avalara and Sovos will do tax calculation and remittance as well.
Thank you so much for the very informative video! I do have one question: I have physical nexuses in Maryland and no other economic nexuses, I understand I have to collect sales tax towards Maryland customers. In my Shopify store do I check "All prices include Tax", "Include or exclude tax based on your customer's country", or "Charge tax on shipping rates" or do I check all three?
Thank you for the content on your channel and the free download. In the appendix to "10 Steps to Ensure Sales Tax Doesn't Burn Down Your Ecommerce Business", the threshold for economic nexus in Kansas is $0.01. As a new Amazon seller not based in Kansas, it would seem I should register and report to state of Kansas if I even have one sale there. Is this correct, or is there still a sales volume to that state where I should worry about registering, collecting and remitting sales tax?
KS does not have a threshold for remote sellers, so legally if you have one sale into KS you should register and remit. However, KS' GA does not agree with their Department of Revenue, so I don't think this "no threshold" will be enforceable.
Hi Jenny, you are liable to collect and remit sales tax for Arizona sales in your situation. Outside if Arizona you should not have to worry about sales tax until you get a significant volume of sales in other states.
This might sound like a stupid question but if I’m in California and I’m shipping to for example a customer in Florida and I have no Nexus with Florida do I charge the California tax still? Or do I charge California tax and Florida tax?
You only charge sales tax to customers for the state they live in. And you don't need to charge sales tax until you have nexus in a state. We just did a webinar going through the entire process of sales tax. I think you'll find it valuable. Here's the link to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
What a great video for such a complex topic! My only question is: once you reach an economic nexus in another state (by $ or #of orders) you only have to start collecting/remitting tax for all orders after? As in nothing retroactively. You then wouldn’t have to pay any back tax on the orders before the specific threshold? Thanks so much in advance.
You are correct. You only pay taxes on the amount after you reach the threshold. If you'd like more information on sales tax, check out our free masterclass "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." It's packed with valuable information AND gives you a roadmap to follow to do it correctly. It also tells you the 3 things NOT to do when you're setting up your sales tax. ledgergurus.com/resources/sales-tax-masterclass/
Hello, thank you so much for taking questions. If I am in state a, and I only have nexus in state a, but all of my sales are from a company in state b, paid via mailed check from state b, and then I ship those items to state b, I don't have to worry about sales tax as long as I don't reach economic nexus in state b? Should I register for sales tax in state A, just in case I get a customer from within my state?
Yes, you should not have to worry about sales tax in state b. Once you anticipate you are close to getting sales in state A, then you could go ahead and register. If you are uncertain and could get sales at anytime in state A, you could register to be safe. That way you can collect from customers, instead of paying out of pocket (if you weren't registered to collect). Also, from your description it sounds like you may be selling to another business. If they are reselling your product (you are acting as the wholesaler), wholesales are typically not subject to sales tax. We wanted to mention that in case its applicable.
Thank you so much for this amazing video. I started an online business 5 months ago. I do everything from home in Michigan. I’m getting closer to reaching 200 sales. My question is do I charge taxes only to the people who order from Michigan where I am based? Or do I have to register in all states?
At the beginning you only register & charge sales tax in the states you have a physical presence in. That sounds like it's Michigan right now. You need to watch your sales in other states to see when you're getting close to economic nexus. We just did a webinar on all this that will answer so many of your questions. Click here to watch it don-demand - ledgergurus.com/resources/sales-tax-course-updates/.
I have an LLC in CA ( where I live), and I created a DBA for my ecommerce business that I have setup with Shopify and Printful. I know my nexus is CA because I'm just starting out and I'm not storing any products at Printful's warehouses. My questions are; 1) can I use the EIN of my LLC as the sales tax ID ( I do have a sellers permit), or do I need to obtain a separate tax ID. 2) In shopify, should I set the location as my LLC business address (since it's registered with the state )or that of one of Printfuls warehouses? I appreciate your time and response.
Hi Tianna, here are our answers: 1) You need to obtain a separate sales tax ID from CDTFA 2) We suggest using your LLC's business address since no inventory is stored at Printful's warehouses yet.
Is there a sales you have to collet if your customer is not living in the US? For example you sell a t shirt to someone in france, and if so would you pay it to your home state or the federal government?
There is not any sales tax that you would owe to your home state or the federal government for international sales. Keep in mind other countries may have sales tax law laws that you would need to follow. But we do not specialize in this area of international sales tax.
Ok so we started a business this year, I'm still a little confused regarding marketplaces like Etsy collecting /remitting taxes . So they collect taxes from the state the customer made the purchase from ( Texas let's say) because we have nexus, correct? they then remit them to that state (Texas) . So my confusion is where does my own state tax come from? If I sale an item on Etsy for $100 Etsy charges taxes and remits to Texas , so they charge $106.25 and remit the 6.25% ($6.25 ) to the state. Now Since we live in Utah I'd have to remit taxes to my state, where do I get those taxes? From the $100? So I'll have to pay 7.25% from that to my State? Thank you in advance.
It all depends on where the customers are. Etsy is collecting the $6.25 from your customer that lives in Texas and remitting that to Texas. Etsy is also collecting $7.15 from your Utah customer that live in Utah county and remit that to Utah.
Thanks for the video I'm just starting a online art supplies store and wow, so much to learn about taxes...maybe it will be a grand opening and then a grand closing...😩
Hello, Do I have to collect taxes on loose leaf tea sold in my new Shopify store from the state of PA.(no sales made yet?? Dry tea has no tax, but I don’t know if that changes when shipping to other states. Thank you
It depends on the state. For now if you are not making much sales yet then you shouldn’t pass economic nexus threshold to have the requirement to collect in other states.
I m selling through my website and App. The purchaser may be in out side state also. How do i decide where to collect sales tax? The purchaser's state or from my home state where i run my business?
Hi Rahul. You will only need to start by collecting and remitting sales tax from any customers in your home state. Make sure you get a sales tax permit from your state before collecting. As your business grows, you may become liable to register, collect, and remit in other states. For example, if you have employees or your inventory is held in other states, you'd be liable for sales tax for customers in those states. Or if the number of transactions or total sales in another state hits certain thresholds. You can download our sales tax guide for more details: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello, so I started an online business with Shopify last year, I've made a few sales but nothing even close to the Nexus amount. I live in Washington DC and I hired a third party to start up my sole proprietorship. Since I asked for my tax ID (been a few months and still haven't received it) the state is now asking for me to file and pay quarterly. I don't know what to do. I have an accountant but she is not responding. What should I be doing?
Since you are physically in DC you should be collecting sales tax from customers with the ship to address in DC. I would download the orders report from Shopify and filter the ship to province to only include DC and see how much sale you need to report to the state. If you haven't made any sales to DC customers, you can report $0 on your quarterly returns.
Hi...I am an eu seller who makes orders to an aliexpress drop shipper with a warehouse in us. The drop shipper sends straight to my us customer. do I have a physical nexus with the state where the dropshipper keeps the warehouse?
Hi! I am an Australian author and here are my questions: 1. What if I am selling digital content through my website like ebooks or monthly membership to read those ebooks? 2. What is I sell physical books (signed paperback) and ship them to my customers wherever they are?
Digital content and physical books are taxed differently. If you don’t pass the economic nexus threshold in the states in the US, I wouldn’t worry about collecting tax.
Hi, There is a business located in Delaware that outsources some of their consulting clients to an LLC located in New Mexico. The NM company does online consulting for Amazon ecommerce businesses so the clients are located in many different states. Since the NM company is being paid directly through the DE company, does that mean we only remit taxes to Delaware and NM? Since its destination, are we even responsible for any taxes to NM?
I don’t think you owe any taxes in NM or DE. DE doesn’t have sales tax and the consulting service in NM doesn’t create nexus for you. I would look at your economic activity to see if you have triggered economic nexus in any states.
Hi, thank you for your videos, we are creating a new Ecommerce Business, based only in Virginia, this means that I will not collect taxes when I sell to other States? The tax should be determined by the ship to address and I won't paid taxes in Virginia or New York, if I ship to NY for example? did I understand correctly?
Yes. You only need to register for a permit and collect sales tax in states where you have nexus. And sales tax is determined by the Ship To address when being shipped from out of state.
I would register and collect taxes for customers in FL for sure because that’s your home state. Even though you use a drop shipper, I would still track your sales by state to monitor if you have economic nexus in other states.
Hello I got something on facebook marketplace saying In my sales tab, Marketplace has a note stating that " Bank Transfers are on Hold. Facebook is required by US law to collect tax information from people making more than $599 per calendar year on Marketplace. Bank transfers from your balance are on hold until your tax info is verified." But i only sold $285 and im so confuse i already peovide my information and is in hold all my payments Is the paper 1099k or 1099M is it gonna affect me?
We are not sure what is happening here. This sounds like an income tax problem, not sales tax, and we would recommend contacting FB about it. Good luck!
Hi I'm interested to know at what $ amount I have to start paying sales tax? I have a new Shopify store selling in the US. Do I have to pay sales tax from day one? I live in Australia.
No, for most states, you start to pay when you pass economic thresholds. Our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download is a good resource for this. There is a chart in the appendix with the economic thresholds for all the states. - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello! I have a question. I am starting a business and will be located in Mississippi, but most of my customers will be located in Virginia. I know that until I reach the 200 sales or $100,000 threshold I don't need to worry about VA. BUT, when I do, will I have to charge both MS and VA tax on those sales? Once I reach the threshold, will I charge those specific customers ONLY VA sales tax? I will no longer have to report those sales to MS/pay taxes to MS on those purchases?
No, you will only charge MS sales tax to MS customers and VA sales tax to VA customers. You only report sales tax for purchases sold to customers IN that state, so you don't need to report VA sales to MS at all.
Hey! What should i do if i have an ecommerce business and use TaxJar, but have made the mistake of collecting taxes in states without nexus and have remitted taxes in those states? How can i pay that sales tax back without having a tax id in those states. Also, if i have missed the deadline to file?
Sorry, I’m not sure I understand your question. How were you able to remit taxes without registering in those states and having a state ID? Generally, when you collect sales tax where you don’t have nexus, you either refund tax back to the customers or you need to register with the states first and file back filings for the past periods. TaxJar doesn’t support back filings currently. You will need to use a different solution or do it manually.
hi we are a now Uk based online store .. we aren't vat registered as we are under VAT threshold in Uk .. do we have to charge any vat in Uk , EU or rest of world when we get orders? is sales tax and vat same ??? thanks a lot
I believe you need to register and charge VAT in the UK and you will need to register and charge VAT in the EU after you pass the 10,000 EUR threshold.
Hi, If I live in the EU and don't have any inventory or employees in the US do I have to collect US sales tax? How does it work for EU residents? Could you make a video for EU sellers that sell into the US?
You most likely only need to worry about sales tax in states where you have a lot of economic activity. Once you reach $100K in annual sales or 200 annual transactions in a state, then you'll want to check that state's economic nexus laws. If you are over their threshold, then you are liable for sales tax. You'll want to register for a sales tax permit in that state, collect sales tax from customers in that state, and file/remit that sales tax to the state. Good luck!
Hi, I want to open a Shopify store where I will be selling goods online and shipping them within the u.s. I live in Utah and Utah’s nexus is if you have a physical presence in Utah, sell $100,000 or more, or have more than 200 transactions. I will be selling items from my house so does that mean I reach the nexus guidelines? And also when I am charging sales tax Will I only charge sales tax if I sell to someone in the same state as me? Or will I charge the sales tax of Utah to every state? Or will I charge different sales tax for each State? I am really confused and haven’t quite found the answer I am looking for online. Thank you!
It sounds like I have a physical nexus in Utah so do I start charging Utah sales tax to people that purchase who live in Utah and purchase from Utah? Or do I wait till I hit both physical/economic? Or do I not worry about either until I hit 200 transactions.
@@emijcallister hi! You will need to charge utah tax to customers in utah from your very first transaction because you are physically located in utah. For other states’ customers, don’t charge sales tax until you pass the economic nexus threshold in other states and that you’ve registered in those states.
what happened If I moved and I ceased a location? I haven't sell for two years. I would like to sell again but I haven't file taxes for the last year? t's overdue and it doesn't allow me because it says I have no registered location. What should I do in this case? Do we still have to registered a location even when we sell online?
I'm not sure I completely understand your question. Did you have an ecommerce business before you moved or a brick and mortar business? You certainly do have register in your state when you sell online. Registering in the other states needs to happen after you pass the economic thresholds or have physical nexus there. For more information, you can download our free PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can access it here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Yes, but only after you hit nexus in each state. Download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" for more details. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
so for someone just getting into e-commerce, I don't have to worry about sales taxes until I start getting sales? or should I already have it ready just in case?
When you're just starting out, the only state you need to worry about registering in is your home state. When you make sales there, you'll need to charge sales tax and remit it to the state. You don't need to worry about charging sales tax in other states until you start approaching the economic thresholds. For a complete and updated list of those thresholds, along with valuable information about doing your sales tax properly, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can find it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ As you get further along in your business, sales tax will get more complicated, but you don't need to be afraid of it. We have several levels of help for ecommerce businesses - DIY (How to Do-It-Yourself -> an email crash course with links to articles and videos like this one), DIWY (Do-It-WITH-You -> a sales tax course where we teach you exactly what you need to do and give you access to experts who can answer all your questions), and DIFY (Do-It-FOR-You -> for when you are ready to outsource). We are happy to help you because our goal is to help as many ecommerce businesses be successful as we can. DO NOT set up your channels to collect sales tax until after you pass the thresholds. You don't want to register until after you pass them because it'll cause all kinds of problems for you, and it's illegal to collect sales tax without a permit.
Hello, thank you for your video. I have a few questions. I plan on selling on Amazon but I will not be doing FBA. I live in New York, and I will register my business and get my tax certificate in New York, should I only collect taxes from customers in New York? Won’t amazon be collecting the taxes for me, and if they do, will they collect taxes in most states even if I don’t have physical nexus and a tax certificate in those states?
Yes Amazon will be collecting because as a marketplace facilitator they have nexus in all the states. You still need to file a return in NY but you won’t owe anything. Please watch my video on how to file a $0 return for amazon sellers.
You can use your SSN when applying for a sales tax license if you are self-employed or a sole proprietor. Sorry for the late reply! Please let us know if you have more questions.
You should register once you start selling. Typically you will only have nexus in your state in which you are operating when starting a business. Most other states require a specific sales level or other economic activity (FBA, employees, offices, etc.) to obtain nexus at which point you would look at registration.
Hello! I've just created my own online store through Shopify as a drop shipping business. I live in CA and order from warehouses in China (only, so far). My store is only shipping within USA. Does this mean that I only have to collect taxes from CA and China? Also, since I've barely made any sales (none to be exact) do I have to register for a sales tax permit just yet? Thanks in advance!
Question: a georgia based online business has nexus only in GA. The website seems to be only collecting taxes from customers ordering from GA, as it’s supposed to. But once Instagram Shop was enabled, transactions from Instagram shop Is collecting sales tax even from customers outside of GA. Now as a GA based LLC the sales tax permit is only for GA. What is the seller supposed to do with the sales tax that Instagram Shop collected from customers residing in multiple different states?
Oh man, that sounds like a pain! You can register for sales tax and remit in all the states where you collected. Then de-register after remitting. Or you can simply refund the sales tax collected back to customers. We would make sure those settings are correct moving forward!
If I'm a new dropshipper residing in Ontario Canada currently with 0 sales, would I need to register now to have products set up to collect sales tax since I live and operate out of this province, or would I only start doing this once I made 200+ sales? Do I need to collect PST?
Hi I’m in the state of Maryland and I have an online boutique. I recently launched, I buy my inventory from other states, should I collect taxes from each customer?
For now, you should only have nexus in your state, so you'll only need to register, collect, and remit sales tax for Maryland customers. Make sure to register for a sales tax permit with your state before collecting. As your business grows, you may have economic nexus in other states as you approach $100K in annual sales and/or 200 transactions (depending on state laws). Also, if you hold your inventory in any other states, you would also need register, collect, and remit in those states.
My husband has an etsy shop, but just recently started selling on shopify. We are in Colorado and he makes everything out of our homes garage. He does not have a physical location besides our home and he does not work with any manufacturers. Does he still need to register for sales tax license? Thank you for your time!
Thank you for the useful information. I have a quick question: I am a small ecommerce business (Shopify) registered in the State of Florida. I sell internationally using print-on demand, do I have to set up taxes in each country that I sell to or do I only collect taxes from my registered State?
We do not deal with international sales tax. Countries have differing laws that you should be aware of in any country that you sell. For the US, you are liable for sales tax in any states where you have nexus (physical or economic, as mentioned in the video). For those states, make sure you register for a sales tax permit before collecting from customers in those states.
I actually have exactly the same question... by saying we do not deal with international sales tax, does it mean we do not need to collect sales tax on international sale? Or we need to but details based on which country you are making sales to? Thanks
Excellent video, thank you. I have incorporated an LLC in the state of Delaware due to no sales tax. I am a non-US resident and I am applying for an EIN without an SSN. I have a virtual office only and I intend to sell products on Amazon as using FBA. As I have no direct control over when a product might sell or where the buyer might be located will I still need to collect and pay sales tax? Thank you for your time.
We can give you more individualized help through a consulting call. You can schedule one here: ledgergurus.com/ecommerce-accounting-services/sales-tax/
I am an existing ecommerce seller (an LLC), registered with my home state, and currently sell only with Marketplace Facilitators (eBay, Amazon, Bonanza, Walmart, Etsy, etc). I file in my state and indicate the overall sales numbers and indicate that all the sales are through Marketplace Facilitators. If I open a Shopfiy or Bigcommerce site and start selling to customers directly, would the threshold information and overall sales for those thresholds consider my Marketplace Facilitator sales as well?
Yes. You need to add all your sales from all your channels to determine nexus and registration/filing requirements when you sell on any channel other than marketplaces only.
Thank you for this info. If i am operating as a sole proprietor and selling tshirts out of my home through an online webstore and have no other partners anywhere and low sales because i am just starting, do i just register with my home state where i am working from? any info would be appreciated.
Hi, As i know Delaware has no sale tax. Does a LLC E-commerce company in Delaware owned by a non-resident person without a physical location have to pay sales tax when selling products to US customers from another states like Wyoming etc. ? Also The products will be shipped from China Warehouse.Thank you in advance!
new sub: very informative. Why do wholesalers ask for a sales tax id before talking to us. I am int in starting an ecommerce and just heard shopify does not collect taxes like other marketplace facilitators. Is this still true or has Shopify changed?
Good question. Shopify is not a marketplace facilitator, so they are not required to collect and remit sales tax for you. You have to go in a set that up yourself in the settings. But don't just go in and set it up for every state yet. You want to wait until you have nexus in a state before you register because otherwise it gets very messy. a list of those thresholds, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ In regard to your first question, wholesalers are not required to pay sales tax for wholesale transactions, so they need to make sure you are a business planning to resell their product so the sales tax responsibility falls on you.
@@LedgerGurus yes but they are requiring beforehand even just to inquire. So I ended up getting one just to obtain basic info. If I don’t decide to start. I’ll have to close my sales tax acct.
Hey I have an online e-commerce store... I'm based here in Texas.. My question is, do I charge taxes for customers living in other states besides Texas?
You won't be liable for sales tax in other states, unless you have nexus in those states. The most common ways you would have nexus is if your inventory is held in other states, you have employees in other states, or you have economic nexus in other states. Economic nexus occurs if you have a large volume of transactions and/or revenue in another state. Each state has differing thresholds, but if you are approaching 200 transactions or $100,000 in sales in any state, you should check their economic nexus laws. Once you have nexus, you are liable to register, collect, and remit sales tax in a state. If you don't, a State can come after you for the sales tax owed and associated penalties.
Hello, I just open a LLC in WY. I do not live in US, I don’t have stores or employees. Also I receive a couple of days ago my EIN number. I want to create a e-commerce store (print and demand system). As I understand if I do not have any store or employees I do not need to pay taxes. My concern is, if I sell physical products to US clients with the print and demand system (printful) do I need to collect the sales tax? And if yes, do I need to add the sales tax for all the states or only for WY?
I’m an e-commerce in Colorado with nexus only in Colorado. How would I set up the taxes for my website if I ship to other states? Would I have to keep track of the sales in each state to make sure I obtain a sales tax registration in those states.
You'll want to watch your sales in other states so you know when you're approaching economic nexus in them. You can find a list of economic nexus thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can get that here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ Also, we are launching our sales tax course and it will answer all your sales tax questions. For more info, click here - ledgergurus.com/resources/sales-tax-course-updates/
We live in Colorado and an online store thru marketplace and have clients pay sales tax so when I file I'm confused if already collected why do I have to report and what am I reporting? is it collected twice ? Cannot get ahold of Colorado dept of revenue to ask any questions! very disturbing. thanks
If the products I want to sell are digital downloadable documents/products (online courses, design posters, stickers) Do I have to collect taxes on those? I also want to start my business so I will probably not make that much money the first couple of months do I have to register my business? I am located in Idaho. Thank you
Downloadable documents are taxed differently in different states, and it mostly depends on the language you use to market these courses. For now, we suggest looking into those laws in regards to Idaho and register for a sales tax permit if necessary. You can always contact your Department of Revenue if you can't find a good answer. Then, you should monitor sales into other states. Once you approach $100K in annual sales or 200 transactions into another state, it would be time to start looking into their sales tax laws in regards to your type of product. You may need to start registering, collecting, and remitting from customers in those states. In regards to business registration, you should always register your business with the state you are operating from when you start your business, if you don't make money, you can claim losses using expenses and that'll help your overall income tax liability.
Hello, I am just starting out making an online shop in my square space website (Business Plan). The sales tax part, - Is there a way other than having to manually enter in sales tax rates for every zip code in North Carolina, US? - If I upgrade to a square-space - Commerce Plan, will it automate the process and calculate sales tax in real time? - Is TaxJar the only other extension that can do this? Do I still need a TaxJar if I get a Commerce Plan? Is anyone else in the same boat or past this phase? Any other suggestions? Thank you!
It would probably be best if you scheduled a consultation with one of our sales tax experts. They'll be able to answer all of these questions. Here's the link - calendly.com/ledgergurus-sales-tax
Thank you so much for this video! I just started a small business based in California, but we've already had a few sales in other states (only a handful). I know you mentioned keeping an eye on our sales to know when we hit the nexus threshold. Just to confirm, are we not required to pay taxes to a state based on its nexus laws until we hit that threshold? Want to make sure I'm understanding that. For example, if I only do 100 sales in Michigan this year and generate $10,000, I do not owe taxes on that revenue and should not be registered in Michigan, correct?
@@byronjohnson1577 Thanks, I use WP/Woo. I just find it baffling that whenever I buy anything online I ALWAYS pay sales tax - How is it that every business is exceeding the threshold in EVERY state?
@@lodatomedia2604 Many aren’t exceeding the sales. Either they are scared and dont understand how this works. Makes you wonder if they are collecting and not even sending it in. Scary stuff. I’ve had to learn so much in three years about this and have so much more to learn.
Hi, If I am selling through Amazon, what is my registration and filing liability in these two cases: 1. Home State: PA, Inventory in Amazon centers CA, CT, IL. No economic nexus thresholds met 2. Home State: PA, Inventory in Amazon centers CA, CT, IL. Economic nexus thresholds met in GA, MA, NC, TN Please help
Because you're only selling through Amazon, the marketplace facilitator laws are in effect and you are pretty much off the hook. The only state you need to worry about collecting and remitting in (Missouri) is not one you have nexus in yet. Watch it, though. If you end up with inventory there, you'll need to deal with sales tax there. Their economic nexus law doesn't go into effect until 1/1/2023. If you'd like more detail, you can watch our on-demand webinar "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." - ledgergurus.com/resources/sales-tax-course-updates/
Hello I have an auction house in Iowa. But sell online as well. Im registered in Iowa only. My accountant does not know how to structure it. Do i collect sales tax from everyone out of state and just pay it to Iowa? or do I only collect from Iowa Residents? Or Do I have to register in all 50 states? This seems way to complicated. 😔
Hi! We are here to help! You don't need to collect in other states until you pass their economic nexus threshold. If you have more detailed questions, feel free to schedule a consulting call with us here so we can help you! calendly.com/ledgergurus-sales-tax
How does a state know how many transactions anyone had in that state? Also, eBay collects tax for me and I only do a small amount of sales at my private online store. Do I add my eBay sales and my private sales together to determine nexus in the 50 states? Do I register in 50 states? That sounds impossible. Thank you for any advice.
Yes, you have to add all your sales from all your channels to determine nexus. Only register in the states you have nexus in. We just finished updating our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. The appendix has a list of all the states with their thresholds. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If I am based in Australia and using print on demand services to sell worldwide,what must i do? I have not sold anything yet, launching ads once i know the answer to this. The POD suppliers have warehouses in over 90 countries and predicting where a product will be shipped from, depends on where the customer is located, and what the closest facility is. Much appreciate your time
I can't comment on other countries because we only do US-based sales tax, but I can tell you that a good place to start for US sales tax is to download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It'll give you a good basis in what to expect here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
This whole system needs to be overhaul, it's like you need a degree in taxes to be able to keep your business functioning. Great video, very informative.
If ever Shopify seller collected sales tax for a buyer online but does not remit that… economic nexus was not yet reached.how will that be presented in the sales tax return? since it is an online payment, should the payment be returned to the buyer? what will be the treatment?
You'll need to start by registering and collecting sales tax for sales in the state where you and your business resides. Remember to register for a sales tax permit before collecting. Then most likely you won't need to worry about sales tax in other states until you reach their economic nexus thresholds as described in the video.
Every state is different, but in general many follow the threshold that was established via the South Dakota vs. Wayfair ruling in 2018 which is $100,000 in sales or 200 transactions per year. Be aware that nexus can also be established in other ways, but that is the economic volume that is most common.
@@LedgerGurus Hi, what happens if you don't claim nexus, but then all of the sudden you get 200 sales in one state, does that mean you now owe taxes even though you did not collect sales tax, due to not thinking you had to?
So I have some good news for you. "200 sales" are the threshold at which sales tax is required. You are not required to pay for those sales, but you are responsible for sales tax on all transactions after that. And congratulations on the increased sales! We are coming out with a sales tax course specifically meant to teach small business owners about how to navigate the world of online sales tax. For more information, click here: ledgergurus.com/resources/sales-tax-course-updates/
Can you give an example of a marketplace nexus? I am trying to figure out if I use PayPal as a payment processor, of that means that I have a marketplace nexus in California. But the wording I was reading is very unclear and an example would be useful. Thanks!!
Hi! Marketplace nexus applies to marketplace facilitators and sellers. PayPal is a payment processor, not a marketplace facilitator. For example, if you sell on Amazon (marketplace) you have nexus in CA and all the states that have sales tax except MO because Amazon has nexus in all those states. So Amazon's nexus extends to you as a seller.
I have a small apparel brand business in FL through shopify. I have only made $3K with less than 200 sales this past year. I am registered, do i have to charge and or pay sales tax at this point?
I live in Missouri and sell products to customers in person, I collect sales tax for MO. I am getting ready to start selling online as well, I don’t expect to exceed any nexus thresholds for other states anytime soon. My question is, if I don’t have to collect sales tax from customers in other states, do I just not charge any tax at all? Thank you!
I am a business in Ohio, do I need to collect sales tax from states other than Ohio... I saw that we are an origin state and our lows are slightly different but it can be very confusing at times. Thanks in advance.
Hi Lyssi. You will only need to collect sales tax in other states when you have nexus in a state. One of the most common ways to have sales tax nexus is if your inventory is ever stored in another state (often through Amazon FBA), then you would need to collect sales tax for all sales in that state. Or if you reach a certain number of sales in a state you ship to (economic nexus). Here's some information on economic nexus thresholds: ledgergurus.com/blog/ecommerce-sales-tax-and-economic-nexus/
I am thinking of starting an online shop using Shopify and would be using a drop-shipper to fulfill orders and they ship the products for me, they are based in California and I am based in Georgia. Do I need to register for a sales tax permit with my home state right away even though I have zero sales and just launched my website (I am still in the research phase, so no website yet)? Also, do I have nexus with CA with the drop-shipper? They create and package up the products and ship them out to the customers and I never see the product. I don't know if that qualifies as a "warehouse"? Lastly, how does shipping taxes work? Is that on a threshold base as well? Or are shipping taxes lumped in with sales tax when you make either 200 annual sales / $100k+ within a single state?
We suggest registering with GA because that’s your home state and you have physical presence there. You don’t have nexus in CA because of the drop shipper. The economic threshold base looks at sales amount and you don’t need to include shipping.
@@LillyEve1 Shipping needs to be taxed in some states, not all the states. Here is a good guide from Avalara: www.avalara.com/us/en/blog/2018/11/how-to-handle-sales-tax-on-shipping-a-state-by-state-guide.html#:~:text=If%20one%20delivery%20charge%20includes,a%20taxable%20sale%20are%20exempt.
I`m a new retailer can someone answer this.When people try to purchase taxable items on fodd stamps like soda and nutrition items , should we charge tax on them or no ? if we don`t them we are not paying sales taxes on these items and that can trigger an audit ?
According to this, no - ask.usda.gov/s/article/Can-sales-tax-be-charged-on-items-I-bought-with-Supplemental-Nutrition-Assistance-Program-benefits#:~:text=Oct%206%2C%202022&text=No%2C%20retailers%20cannot%20charge%20sales,Assistance%20Program%20(SNAP)%20benefits.
I'm really trying to understand this. I will be selling digital video content that people download. I live in CA and have an S Corp. 1. Do I still apply for a Sales Tax ID? 2. Since I'll be selling in all 50 states, do I set them all up to receive sales tax? 3. What about international sales?
Yes, if you are selling in all 50 states, you will have to deal with sales tax. However, you don't have to register with each state until you pass its economic nexus laws. We have an appendix with those thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can download it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. We are in the process of updating it, and when you download the current one, you're automatically on the list to receive the new one when it comes out. We don't work with international sales tax, so you'll have to get that info somewhere else. :)
Hello LedgerGurus, I had been watching a few of your videos, all very informative. Thank you. I have some questions and hope you can help me: 1. I am a non US Citizen. I am planning on selling online via Shopify using a 3PL fulfillment center based in FL. So, I guess I need to register for sales tax in FL since that is where my 3PL is based? 2. I have not started selling yet so, do I need to apply before I start? 3. My other question is, do I need to register for EIN or ITIN as a company or individual for other tax requirement? Thank you for your time.
Having a 3PL handle your inventory does create nexus in FL. If you have nexus in other states then you need to register before collecting tax but not before selling products. And our clients usually register for an EIN.
@@LedgerGurus Thanks. I just want to Make sure I understand it correctly. I will have inventory there stored in a 3PL warehouse. And the 3PL despatch the goods for me as and when I get orders online. So, do I need to collect sales tax in FL as I think that is my Nexus even though I am not a US citizen or living in the US?
@@senoraTam Thanks for following up. We read through that question too quickly. Because your 3PL stores and handles your inventory, this does create nexus for you in FL. Thanks!
Hi I am wanting to do online print on demand tshirts. So i guess that in a way in dropshipping due to the fact that I the seller never have inventory nor see it, I put design on shirt through computer pay the product and the print on demand company does the fullfillment. Do I have physical presence? Do I automatically have physical nexus in my home state just because I live here?
Hi Yulis, you do have physical presence in your home state because you live there. We suggest you just monitor your economic nexus threshold per state by sales revenue and volume.
Hi, I'm under 18 and have a Shopify account that I pay the monthly subscription on, and I have a few questions I hope you can answer. (Disclaimer: I'm from the US) 1. If I change the Shopify account to my parent's name, will they have to pay the Shopify account's taxes? 2. When registering for Stripe for Shopify, should I use all of my parent's information? 3. When creating a PayPal account, can I put it under my parent's name and use my high school checking account debit card? 4. Is there any way I could have money sent to my account without Shopify shutting down my store?
I’m based in GA with an LLC. I sell on eBay/poshmark. Those companies are collecting sales tax on behalf of the buyers state. Do I only collect Sales tax for GA buyers?
Yes but since they are collecting and remitting for you, you don’t owe the state anything. You might still need to report the sale and take the whole amount as a deduction though.
I have a question plz. I have exceeded the sales nexus last year so I filed sales tax return in maine state but this year I did not exceed the threshold so what should I do??
Maine’s economic nexus threshold applies to current and prior calendar year. So even if you don’t pass the threshold this year, as long as you passed it last year you will need to keep filing. If there are two years in a row that you don’t pass the economic nexus threshold then you can de-register and stop filing.
@@LedgerGurus this means that I have to collect sales tax from customers, right? plus could you plz tell me the process of deregistration and the source if this information? Thank you so much for your help
@@mahmoudfarag4136 if you have nexus in Maine, then you need to keep collecting and filing. You can file a final return or call the department of revenue to cancel the license.
Hello! I have a question if anyone could please help me out. So I know to collect the tax you need your sales tax ID of course. However, I was wondering if I could use my EIN number as the sales tax ID instead. I received it through the IRS.gov website.
Hi! You can’t use your EIN, you have to register with each state and they will issue you a specific tax ID to that state. Although there are a few states that will keep their tax ID same as your EIN, but you still need to register with the states and be in their systems.
@@LedgerGurus Hey! thanks for letting me know! Sorry to bother again but I have one more burning question. I am dropshipping, and I am located in Illinois while my supplier is in china. To collect tax, do I need to register a sales tax id with every single state even though I am only in Illinois?
@@vrsuhfx only in states where you have nexus. Then you will need to collect and remit for customers in those states. Since you are located in Illinois, you have physical nexus there. Then you will need to worry about checking economic nexus thresholds in other states as you approach $100K in annual sales or 200 transactions in any other states. Best of luck!
What about selling courses online on a website? It's an intangible asset because there is no physical course; the students would do it on the same website. Do those types of companies have to pay sales taxes? What about who sells courses is not an entity (LLC) but a sole proprietor? Thanks
Depends on the state. Generally, online courses that are pre-recorded are usually taxed, but if there’s any live interaction with the instructor, it becomes a service and is not taxable.
Thx for the great informative vid! You're amazing for taking the time to respond to everyone too. I was waiting to get a sales tax id until I actually had a successful website with consistent sales. I went thru like 19 different shopify stores in the last 2 and a half years. Apparently I now have 2 successful stores with consistent sales cause I got a notification from shopify on both stores that says I may have a tax liability in 1 state and should start collecting sales tax. Both notifications say its my home state (nexus state). Both stores are less than 100k each but together are a little over 100k. So not that successful, just consistent. Does shopify report my income to the state like they report my income on 1099 to the IRS? Since its two different shopify stores that are two different brands, should I get two different tax id's for each store? Or just use one tax id for both stores? Since I am barely collecting sales tax as soon as I get my sales tax id, am I still liable for past sales?
I answered part of this question over on the other video you submitted a comment on. Technically you are still liable for past sales, but it's unlikely that amount was very much. You'll have to weigh the risks of not remitting that amount vs the practicality of it. I suggest you watch our sales tax masterclass called "The Uncomplicated Truth about Sales Tax." We go over this idea in that. And no, Shopify doesn't report your sales to the states.
The US needs a tax rehual. There is no need for taxes to be this complex.
It’s incredibly ridiculous
Yes that's right. The reason why it's so complicated is because the political prostitutes try to make it look like they're doing something. Not only that, they always want your money.
Flat 7.475% tax. Collect on everything pay to one government office who gives it to the states items were sold to who in turn devieds it to localities.
In my city, we have about 15 tax locations or districts its split into 3 counties you do the math but how many locations are in each state, how many cities whats the local tax liability, how many states? You might think a computer program, but one vote can make it outdated. Its too much shit to deal with for a small business and difficult at best for a large company like Amazon.
Flat tax. Register with just them
And let retailers do what they do best
Makes sales and ship products.
@@bobbg9041 I’m in California and last time I checked we have over 200 individual county tax rates. Then there are individual city/town tax rates. As a new business just starting out I honestly have no idea where to start I can’t seem to find an easy to understand way to deal with all of this!
I agree coming from Africa this is a head ace they r crzy. It is too much..
Understanding the concept of Ecommerce sales tax and how it works is VERY complicated, but you were able to simplify it for beginners. Thank you!
You're very welcome! Glad to help. :)
Very informative video! This is always a very technical and often misunderstood area of business. Great content.
Thanks for the feedback!
Liked & Subscribed - Got turned on to you by our bookkeeper. We're swimming in nexus questions- why is this so hard!!!?!?!? Ok, I"m reading the PDF and will click on all the links and watch as many vids as possible. Then I'll reach out to you for help! Thank you for creating and sharing this content - super helpful and very supportive.
Yes it's definitely confusing. Feel free to reach out if you have any additional questions.
I'm so mad that school never taught us the complexity of taxes.
yeah I never knew it.
That's right I went school for business just because want to learn about tax but no clue, they only teach what I dont really need
Subjects are 45 minutes on, theres only so much high school can teach you. I’d be more mad your parents didnt teach you.
Take ownership and learn that shit. No good in complaining about what school never taught us. Forget that rainbow fish and start learning what matters lol
You're very professional, & I've applied for the DIY Course info. Thankyou. Thankyou. Thankyou. Thankyou. Thankyou.
You are so welcome.
this video and the comments anwsered a lot of my questions! I wasnt sure if i had to collect sales tax from each state and county but it seems like its only the place you are physically present in. If im correct , thank you for the info!
Question: Once I pass a state’s economic threshold then i start collecting sales tax in that state?
So if my extremely small business isn't hitting any of the "items sold" or "income" thresholds for the states, I only have to collect for the state I have nexus (live) in?
Yes, that is correct.
Also keep in mind other ways you'd have "physical nexus". For example, if your inventory is stored in any other states, you have employees in other states, etc. This is usually unlikely for small sellers unless they use Amazon FBA.
Thanks for the info!
You're welcome!
First of all, very informative videos on the sales tax topic - best ones I can find on RUclips so far, well done and thanks!
Now my questions: we are a small Canadian business that sells to the States through two channels: Amazon FBA, and Amazon MCF (Multi-chanel fulfillment) via our own website.
Sales volumes are way below the $100,000 / 200 threshold for every state (so no economic nexus?). BUT since we are using FBA and MCF we do use Amazon’s warehouses, which means we still need to register and collect sales tax that we made on our website (MCF) in those states? Even though we just have, say, $5,000/year revenue in that state?
Thank you and keep on the great work!
Great question. FBA can get a bit tricky. I suggest you download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. It will give you some great info on this topic.
In the 1st section - Determine Sales Tax Nexus - it says, "All states, except, IL, NY, and AZ consider your stock held in an Amazon warehouse enough of a presence to create nexus in their state." So yes, because nexus has been created through FBA, you do have to register and collect on your website.
Hi, thank you for this helpful video! If I am starting a ecommerce business and shipping products from my own home in Massachussets, do I need to register and collect taxes from Mass? Do I have to keep track of my sales volume by state when I get bigger to determine my nexus one by one?
Yes, you'll need to register, collect, and remit sales tax for Massachusetts sales.
Then you will want to track sales volume by state as you grow to determine your economic nexus. There still may be other ways you have nexus in states, but economic nexus is one of the most common.
you're awesome, thanks for the info🙂
Hi! Awesome video! Our business is registered in Maryland and we have a MD sales tax ID. But we also plan to package and ship orders from NY. Do we need to register for a sales tax ID in NY as well? We’re just starting and the business is very small so we’re just a bit confused. Thanks for your help!
I believe you do since that would also count as a physical nexus. I would talk to your accountant to make sure you're doing everything correctly from the start. I'm in the same boat as I'm starting up an online shop and will be drop shipping a few items from another state. Good luck!
Thank you for the very informative video! I have one question: say I have physical nexuses in both Michigan and Maryland and no other economic nexuses, do I only have to collect sales tax towards Michigan and Maryland customers, using the sales tax rates in those respective states?
That is correct. Remember to register for a sales tax permit in Michigan and Maryland before collecting sales tax from customers in those states.
Hello! Thank you for your videos. Extremely helpful. I have another question: 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?
I would say yes because you are physically located in FL, especially if you file income tax in FL, they would already have your information and know about your side hustle.
If I have an online business in California from home and will be shipping from California to other states. Do I have to charge taxes for the states I ship to?
Hi Herman. If you do not have nexus in these other states, you don't need to collect sales tax. Just make sure to watch economic nexus thresholds. When you reach a certain number of sales in states you ship to, then you'll need to start collecting in those states: ledgergurus.com/blog/ecommerce-sales-tax-and-economic-nexus/
Thank you so much for your helpful and informative videos! I'm just starting an online, e-commerce business and do not have a warehouse or physical presence. I'm re-selling retail products. I live in CA, and will only be selling to CA residents. Do I need to have a seller's permit, and do I need to collect sales tax? If I need to collect sales tax, should I set my sales tax rate to CA's tax rate? Your advice is greatly appreciated.
Yes, because your business is based in CA, you need to register and collect sales tax in CA. If you want more information, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. It's full of useful tips. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi LedgerGurus - Thank you for this amazing video! And thank you for taking the time to answer our questions! I have a very simple question:
I'd like to start an ecommerce website in Illinois. I will work from home (no real office). I'm NOT planning to be an LLC, Corp, etc. Just a person selling their stuff. I will have just a few items to sell to start with (no "warehouse" in the house). My customers will hopefully be from all over the US. Now, do I have to register in Illinois and get my tax ID right away? Even BEFORE I sell a single item because I live here and even though I don't have an office? Or do I register AFTER I meet the Illinois economic thresholds? Also, by "registering and getting tax ID", does that mean I (a person) will become a business (an LLC, a corp, partnership, etc)? THANK YOU SO MUCH AGAIN!
Yes, you do need to register for a sales tax permit in IL because you have a physical presence there. Your business is based in your home, but it is still physically in IL. The IL economic threshold is only for those who do not meet the physical nexus rule. And no, you'll still just be a sole proprietorship after registering. By the way, you really need to watch our recent video on IL sales tax laws changes - ruclips.net/video/eROXxrTZPps/видео.html. You can also read our blog about it here - ledgergurus.com/illinois-sales-tax-explained/. These changes WILL affect the way you remit sales tax going forward, no matter what size your business is.
Hello, great information shared! We plan to operate from EU with a a company settled here and sell in the US. If we consider we are going to be a B2C we do not have to charge VAT, but we have to collect sales tax from each state's citizen differently or collect sales tax with the nexus with our print provider?
The location of your print provider should not create nexus. Since your business is registered and based outside the US, you likely won't have nexus in any states until you start to hit economic sales tax thresholds. If you are approaching $100K of annual sales in a state and/or 200 transactions, then you should look into their economic nexus laws. Also, if you have any employees or inventory held in the US, you would have nexus in the states where you have employees or inventory held. And therefore would need to register, collect, and remit sales tax for sales in those states.
So I wanna open an online boutique in Oregon, and theres no sales tax here, I would be shipping from my home. Do I just track my sales and if they ever get over 200 transactions or 1OO,OOO in a certain state I start to charge sales tax and have to register in that state? Or do you charge sales tax since day one. Thanks in advanced! Im very confused.
This is correct. Be aware that states do have differing thresholds of transactions and/or sales. But generally when you are approaching 200 transactions or $100K in a state, you'll want to check their economic nexus laws. When you do have sales tax obligations in a state, just make sure you register for a sales tax permit before collecting sales tax from customers. For more help, you can download our sales tax guide here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
No. Its differnt in every state now.
Its a total cluster fuc*
Thank you so much. Very informative video. 1- If the company that manufactures my product (which I'll be selling online) resides in a different state, does that mean I have nexus in that state?
2- Also, if the threshold is reached in one year, then I have to register with the state and start adding sales tax even if my revenues in the next year maybe less than the threshold I met on the previous year? For example, I made $150,000 in Arizona in 2020 in online sales, then I need to register and start charging Arizona's customers the sales tax in 2021 even if the total of my revenues from Arizona in 2021 is say $20,000. Is that correct? So, I have to charge sales tax after the threshold of a specific state is met in one specific year regardless if that threshold is kept in the subsequent years.
Hi Sarah, Here are the answers:
1. Location of manufacturer usually does not create nexus.
2. Yes, this is accurate. You can reevaluate at the end of next year and de-register the year following.
Thanks for this video.
I’m about to start my very small online business. And I plan to sell worldwide because basically any one from around the world can click and buy.
From the explanations you gave,
1. If someone buys my product from any of the US states I do not have to charge them for tax neither do I have to pay tax right as long as I have not hit the threshold ?
2. I will be operating from one of the Canadian provinces, let’s say Ontario for example, I only need to charge buyers for taxes in Ontario and not other provinces ?
3. Before one can charge a tax, you must have a legal permit to do so right ? so basically it’s not like you can just input 5 % for example of total price of good the customer bought because you know for example the province you operate from charge 5% tax
4. Does one need to register the business even though very small first before selling at all?
Sorry for the many questions
Hi Mary, here are our responses:
1. That is correct. You most likely will only need to register and collect in states where you have a physical presence (inventory stored, where you are located, employees hired, etc) or where you have economic nexus (the annual sales or transactions thresholds)
2. This video only applies to US sales tax. We don't handle sales tax outside the US.
3. Yes, you need a legal permit. Any sales tax collected is the state's money. You are liable to remit that to the state, and therefore legally cannot collect unless you have a permit to do so.
4. Here's an article on the benefits of registering your business; www.oberlo.com/blog/how-to-register-a-business
This is so informative information. I filled out a form on your website to get more sales tax guidance for my Shopify website . I look forward to your reply. Thank you
I'm glad you liked it. We have lots more sales tax information to help you with.
I wish I can get more guidance but I can’t afford your prices😢
@@OnlineIncomeSisStarHave you looked into our sales tax courses? They are specifically geared towards sellers like you. ledgergurus.thinkific.com/collections/sales-tax
This is such a great video! You are very helpful. Can you answer this question for me please? I am an product Ecommerce business in a destination state as my only nexus and I sell nationwide. Do I only do destination tax collection and remitting for my current state or all states that have destination tax designation?
You only need to register collect and remit sales tax in the states where you have nexus. In your case it’ll be your home state and other states if you pass their economic nexus threshold. Destination means the rate you are collecting should be determined by the ship to address instead of ship from address, it doesn’t have much to do with nexus :)
Hi there,
Thanks for this informative and very detailed video; truly grateful for that!
As of today, I don't understand how sales tax collection works at all.
I was wondering if you could help clarify the following questions:
1. If I have not yet set up a US entity (LLC, S-corp, etc), how, if at all, should I collect tax?
2. I am in the process of registering for an LLC, and I was thinking about Wyoming. If I end up doing so, does that mean that I would just need to collect sales tax in Wyoming? Also, what if I would be managing this new business (LLC) remotely? Does it have any effects?
3. Aside from Taxjar (if recommended), is there any other automated software that simply does the tax collection for us?
Thank you so much in advance!
Thanks for reaching out. These are some great questions. The first place to start with all this would be our free masterclass called "The Uncomplicated Truth about Sales Tax." You can find it here: ledgergurus.com/resources/sales-tax-masterclass/
Next, your questions:
1. You need an FEIN to register or an ITIN (if you are a foreign seller).
2. Yes, that will create physical presence in Wyoming, even if you manage it remotely.
3. Avalara and Sovos will do tax calculation and remittance as well.
Thank you so much for the very informative video! I do have one question: I have physical nexuses in Maryland and no other economic nexuses, I understand I have to collect sales tax towards Maryland customers. In my Shopify store do I check "All prices include Tax", "Include or exclude tax based on your customer's country", or "Charge tax on shipping rates" or do I check all three?
You would not check any of the three. Maryland does not charge sales tax on shipping if shipping is separately stated.
Thank you for the content on your channel and the free download. In the appendix to "10 Steps to Ensure Sales Tax Doesn't Burn Down Your Ecommerce Business", the threshold for economic nexus in Kansas is $0.01. As a new Amazon seller not based in Kansas, it would seem I should register and report to state of Kansas if I even have one sale there. Is this correct, or is there still a sales volume to that state where I should worry about registering, collecting and remitting sales tax?
KS does not have a threshold for remote sellers, so legally if you have one sale into KS you should register and remit. However, KS' GA does not agree with their Department of Revenue, so I don't think this "no threshold" will be enforceable.
If I am dropshipping and my LLC is registered with the state I live in (Arizona) with a PO Box do I need to collect sales tax?
Hi Jenny, you are liable to collect and remit sales tax for Arizona sales in your situation. Outside if Arizona you should not have to worry about sales tax until you get a significant volume of sales in other states.
This might sound like a stupid question but if I’m in California and I’m shipping to for example a customer in Florida and I have no Nexus with Florida do I charge the California tax still? Or do I charge California tax and Florida tax?
You only charge sales tax to customers for the state they live in. And you don't need to charge sales tax until you have nexus in a state. We just did a webinar going through the entire process of sales tax. I think you'll find it valuable. Here's the link to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
What a great video for such a complex topic! My only question is: once you reach an economic nexus in another state (by $ or #of orders) you only have to start collecting/remitting tax for all orders after? As in nothing retroactively. You then wouldn’t have to pay any back tax on the orders before the specific threshold? Thanks so much in advance.
You are correct. You only pay taxes on the amount after you reach the threshold. If you'd like more information on sales tax, check out our free masterclass "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." It's packed with valuable information AND gives you a roadmap to follow to do it correctly. It also tells you the 3 things NOT to do when you're setting up your sales tax. ledgergurus.com/resources/sales-tax-masterclass/
What is the threshold I am confused 🤔🤔
Hello, thank you so much for taking questions. If I am in state a, and I only have nexus in state a, but all of my sales are from a company in state b, paid via mailed check from state b, and then I ship those items to state b, I don't have to worry about sales tax as long as I don't reach economic nexus in state b? Should I register for sales tax in state A, just in case I get a customer from within my state?
Yes, you should not have to worry about sales tax in state b. Once you anticipate you are close to getting sales in state A, then you could go ahead and register. If you are uncertain and could get sales at anytime in state A, you could register to be safe. That way you can collect from customers, instead of paying out of pocket (if you weren't registered to collect).
Also, from your description it sounds like you may be selling to another business. If they are reselling your product (you are acting as the wholesaler), wholesales are typically not subject to sales tax. We wanted to mention that in case its applicable.
Thank you so much for this amazing video. I started an online business 5 months ago. I do everything from home in Michigan. I’m getting closer to reaching 200 sales. My question is do I charge taxes only to the people who order from Michigan where I am based? Or do I have to register in all states?
At the beginning you only register & charge sales tax in the states you have a physical presence in. That sounds like it's Michigan right now. You need to watch your sales in other states to see when you're getting close to economic nexus. We just did a webinar on all this that will answer so many of your questions. Click here to watch it don-demand - ledgergurus.com/resources/sales-tax-course-updates/.
🤲🏽
I have an LLC in CA ( where I live), and I created a DBA for my ecommerce business that I have setup with Shopify and Printful. I know my nexus is CA because I'm just starting out and I'm not storing any products at Printful's warehouses. My questions are; 1) can I use the EIN of my LLC as the sales tax ID ( I do have a sellers permit), or do I need to obtain a separate tax ID. 2) In shopify, should I set the location as my LLC business address (since it's registered with the state )or that of one of Printfuls warehouses? I appreciate your time and response.
Hi Tianna, here are our answers:
1) You need to obtain a separate sales tax ID from CDTFA
2) We suggest using your LLC's business address since no inventory is stored at Printful's warehouses yet.
Is there a sales you have to collet if your customer is not living in the US? For example you sell a t shirt to someone in france, and if so would you pay it to your home state or the federal government?
There is not any sales tax that you would owe to your home state or the federal government for international sales. Keep in mind other countries may have sales tax law laws that you would need to follow. But we do not specialize in this area of international sales tax.
Ok so we started a business this year, I'm still a little confused regarding marketplaces like Etsy collecting /remitting taxes . So they collect taxes from the state the customer made the purchase from ( Texas let's say) because we have nexus, correct? they then remit them to that state (Texas) . So my confusion is where does my own state tax come from? If I sale an item on Etsy for $100 Etsy charges taxes and remits to Texas , so they charge $106.25 and remit the 6.25% ($6.25 ) to the state. Now Since we live in Utah I'd have to remit taxes to my state, where do I get those taxes? From the $100? So I'll have to pay 7.25% from that to my State? Thank you in advance.
It all depends on where the customers are. Etsy is collecting the $6.25 from your customer that lives in Texas and remitting that to Texas. Etsy is also collecting $7.15 from your Utah customer that live in Utah county and remit that to Utah.
Thanks for the video I'm just starting a online art supplies store and wow, so much to learn about taxes...maybe it will be a grand opening and then a grand closing...😩
Hope not! Let us know if there’s anything we can help with!
Hello, Do I have to collect taxes on loose leaf tea sold in my new Shopify store from the state of PA.(no sales made yet?? Dry tea has no tax, but I don’t know if that changes when shipping to other states. Thank you
It depends on the state. For now if you are not making much sales yet then you shouldn’t pass economic nexus threshold to have the requirement to collect in other states.
I m selling through my website and App. The purchaser may be in out side state also. How do i decide where to collect sales tax? The purchaser's state or from my home state where i run my business?
Hi Rahul. You will only need to start by collecting and remitting sales tax from any customers in your home state. Make sure you get a sales tax permit from your state before collecting.
As your business grows, you may become liable to register, collect, and remit in other states. For example, if you have employees or your inventory is held in other states, you'd be liable for sales tax for customers in those states. Or if the number of transactions or total sales in another state hits certain thresholds. You can download our sales tax guide for more details: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello, so I started an online business with Shopify last year, I've made a few sales but nothing even close to the Nexus amount. I live in Washington DC and I hired a third party to start up my sole proprietorship. Since I asked for my tax ID (been a few months and still haven't received it) the state is now asking for me to file and pay quarterly. I don't know what to do. I have an accountant but she is not responding. What should I be doing?
Since you are physically in DC you should be collecting sales tax from customers with the ship to address in DC. I would download the orders report from Shopify and filter the ship to province to only include DC and see how much sale you need to report to the state. If you haven't made any sales to DC customers, you can report $0 on your quarterly returns.
Hi...I am an eu seller who makes orders to an aliexpress drop shipper with a warehouse in us. The drop shipper sends straight to my us customer. do I have a physical nexus with the state where the dropshipper keeps the warehouse?
No. You don't own the inventory, so its location doesn't create nexus.
Hi! I am an Australian author and here are my questions:
1. What if I am selling digital content through my website like ebooks or monthly membership to read those ebooks?
2. What is I sell physical books (signed paperback) and ship them to my customers wherever they are?
Digital content and physical books are taxed differently. If you don’t pass the economic nexus threshold in the states in the US, I wouldn’t worry about collecting tax.
Hi, There is a business located in Delaware that outsources some of their consulting clients to an LLC located in New Mexico. The NM company does online consulting for Amazon ecommerce businesses so the clients are located in many different states. Since the NM company is being paid directly through the DE company, does that mean we only remit taxes to Delaware and NM? Since its destination, are we even responsible for any taxes to NM?
I don’t think you owe any taxes in NM or DE. DE doesn’t have sales tax and the consulting service in NM doesn’t create nexus for you. I would look at your economic activity to see if you have triggered economic nexus in any states.
Hi, thank you for your videos, we are creating a new Ecommerce Business, based only in Virginia, this means that I will not collect taxes when I sell to other States? The tax should be determined by the ship to address and I won't paid taxes in Virginia or New York, if I ship to NY for example? did I understand correctly?
Yes. You only need to register for a permit and collect sales tax in states where you have nexus. And sales tax is determined by the Ship To address when being shipped from out of state.
HI, I am dropshipping from china, my LLC is in florida. Do I need to collect taxes only from people who reside in FL?
I would register and collect taxes for customers in FL for sure because that’s your home state. Even though you use a drop shipper, I would still track your sales by state to monitor if you have economic nexus in other states.
Hello I got something on facebook marketplace saying
In my sales tab, Marketplace has a note stating that " Bank Transfers are on Hold. Facebook is required by US law to collect tax information from people making more than $599 per calendar year on Marketplace. Bank transfers from your balance are on hold until your tax info is verified."
But i only sold $285 and im so confuse i already peovide my information and is in hold all my payments
Is the paper 1099k or 1099M is it gonna affect me?
We are not sure what is happening here. This sounds like an income tax problem, not sales tax, and we would recommend contacting FB about it. Good luck!
Hi I'm interested to know at what $ amount I have to start paying sales tax? I have a new Shopify store selling in the US. Do I have to pay sales tax from day one? I live in Australia.
No, for most states, you start to pay when you pass economic thresholds. Our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download is a good resource for this. There is a chart in the appendix with the economic thresholds for all the states. - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello! I have a question.
I am starting a business and will be located in Mississippi, but most of my customers will be located in Virginia. I know that until I reach the 200 sales or $100,000 threshold I don't need to worry about VA. BUT, when I do, will I have to charge both MS and VA tax on those sales? Once I reach the threshold, will I charge those specific customers ONLY VA sales tax? I will no longer have to report those sales to MS/pay taxes to MS on those purchases?
No, you will only charge MS sales tax to MS customers and VA sales tax to VA customers. You only report sales tax for purchases sold to customers IN that state, so you don't need to report VA sales to MS at all.
Hey! What should i do if i have an ecommerce business and use TaxJar, but have made the mistake of collecting taxes in states without nexus and have remitted taxes in those states? How can i pay that sales tax back without having a tax id in those states. Also, if i have missed the deadline to file?
Sorry, I’m not sure I understand your question. How were you able to remit taxes without registering in those states and having a state ID? Generally, when you collect sales tax where you don’t have nexus, you either refund tax back to the customers or you need to register with the states first and file back filings for the past periods. TaxJar doesn’t support back filings currently. You will need to use a different solution or do it manually.
hi we are a now Uk based online store .. we aren't vat registered as we are under VAT threshold in Uk .. do we have to charge any vat in Uk , EU or rest of world when we get orders?
is sales tax and vat same ??? thanks a lot
I believe you need to register and charge VAT in the UK and you will need to register and charge VAT in the EU after you pass the 10,000 EUR threshold.
Hi, If I live in the EU and don't have any inventory or employees in the US do I have to collect US sales tax? How does it work for EU residents? Could you make a video for EU sellers that sell into the US?
You most likely only need to worry about sales tax in states where you have a lot of economic activity. Once you reach $100K in annual sales or 200 annual transactions in a state, then you'll want to check that state's economic nexus laws. If you are over their threshold, then you are liable for sales tax. You'll want to register for a sales tax permit in that state, collect sales tax from customers in that state, and file/remit that sales tax to the state. Good luck!
Hi, I want to open a Shopify store where I will be selling goods online and shipping them within the u.s.
I live in Utah and Utah’s nexus is if you have a physical presence in Utah, sell $100,000 or more, or have more than 200 transactions.
I will be selling items from my house so does that mean I reach the nexus guidelines?
And also when I am charging sales tax Will I only charge sales tax if I sell to someone in the same state as me?
Or will I charge the sales tax of Utah to every state?
Or will I charge different sales tax for each State?
I am really confused and haven’t quite found the answer I am looking for online.
Thank you!
It sounds like I have a physical nexus in Utah so do I start charging Utah sales tax to people that purchase who live in Utah and purchase from Utah?
Or do I wait till I hit both physical/economic?
Or do I not worry about either until I hit 200 transactions.
@@emijcallister hi! You will need to charge utah tax to customers in utah from your very first transaction because you are physically located in utah. For other states’ customers, don’t charge sales tax until you pass the economic nexus threshold in other states and that you’ve registered in those states.
what happened If I moved and I ceased a location? I haven't sell for two years. I would like to sell again but I haven't file taxes for the last year? t's overdue and it doesn't allow me because it says I have no registered location. What should I do in this case? Do we still have to registered a location even when we sell online?
I'm not sure I completely understand your question. Did you have an ecommerce business before you moved or a brick and mortar business? You certainly do have register in your state when you sell online. Registering in the other states needs to happen after you pass the economic thresholds or have physical nexus there. For more information, you can download our free PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can access it here: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
so you need to apply for all states individually on the state's website????
Yes, but only after you hit nexus in each state. Download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" for more details. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Love your video. Does sales tax need to be collected for international orders? For example, selling US products to overseas customers. Thanks!
Probably, but we don't do any international sales tax. You'll have to get the specific information for that elsewhere.
so for someone just getting into e-commerce, I don't have to worry about sales taxes until I start getting sales? or should I already have it ready just in case?
When you're just starting out, the only state you need to worry about registering in is your home state. When you make sales there, you'll need to charge sales tax and remit it to the state. You don't need to worry about charging sales tax in other states until you start approaching the economic thresholds. For a complete and updated list of those thresholds, along with valuable information about doing your sales tax properly, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can find it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
As you get further along in your business, sales tax will get more complicated, but you don't need to be afraid of it. We have several levels of help for ecommerce businesses - DIY (How to Do-It-Yourself -> an email crash course with links to articles and videos like this one), DIWY (Do-It-WITH-You -> a sales tax course where we teach you exactly what you need to do and give you access to experts who can answer all your questions), and DIFY (Do-It-FOR-You -> for when you are ready to outsource). We are happy to help you because our goal is to help as many ecommerce businesses be successful as we can.
DO NOT set up your channels to collect sales tax until after you pass the thresholds. You don't want to register until after you pass them because it'll cause all kinds of problems for you, and it's illegal to collect sales tax without a permit.
Hello, thank you for your video.
I have a few questions. I plan on selling on Amazon but I will not be doing FBA. I live in New York, and I will register my business and get my tax certificate in New York, should I only collect taxes from customers in New York? Won’t amazon be collecting the taxes for me, and if they do, will they collect taxes in most states even if I don’t have physical nexus and a tax certificate in those states?
Yes Amazon will be collecting because as a marketplace facilitator they have nexus in all the states. You still need to file a return in NY but you won’t owe anything. Please watch my video on how to file a $0 return for amazon sellers.
What if your self employed, sole proprietor would i still need a tax id or can i just use my SSN
You can use your SSN when applying for a sales tax license if you are self-employed or a sole proprietor. Sorry for the late reply! Please let us know if you have more questions.
Hey, should I register right away for sales taxes if I’m just starting a business?
You should register once you start selling. Typically you will only have nexus in your state in which you are operating when starting a business. Most other states require a specific sales level or other economic activity (FBA, employees, offices, etc.) to obtain nexus at which point you would look at registration.
Hello! I've just created my own online store through Shopify as a drop shipping business. I live in CA and order from warehouses in China (only, so far). My store is only shipping within USA. Does this mean that I only have to collect taxes from CA and China? Also, since I've barely made any sales (none to be exact) do I have to register for a sales tax permit just yet? Thanks in advance!
We don't know about China, but you do need to register and remit in CA because you have a physical presence there.
Question: a georgia based online business has nexus only in GA. The website seems to be only collecting taxes from customers ordering from
GA, as it’s supposed to. But once Instagram Shop was enabled, transactions from Instagram shop Is collecting sales tax even from customers outside of GA. Now as a GA based LLC the sales tax permit is only for GA. What is the seller supposed to do with the sales tax that Instagram Shop collected from customers residing in multiple different states?
Oh man, that sounds like a pain! You can register for sales tax and remit in all the states where you collected. Then de-register after remitting. Or you can simply refund the sales tax collected back to customers. We would make sure those settings are correct moving forward!
If I'm a new dropshipper residing in Ontario Canada currently with 0 sales, would I need to register now to have products set up to collect sales tax since I live and operate out of this province, or would I only start doing this once I made 200+ sales? Do I need to collect PST?
We cannot give advice about Canada because we only work with US states.
Hi I’m in the state of Maryland and I have an online boutique. I recently launched, I buy my inventory from other states, should I collect taxes from each customer?
For now, you should only have nexus in your state, so you'll only need to register, collect, and remit sales tax for Maryland customers. Make sure to register for a sales tax permit with your state before collecting. As your business grows, you may have economic nexus in other states as you approach $100K in annual sales and/or 200 transactions (depending on state laws). Also, if you hold your inventory in any other states, you would also need register, collect, and remit in those states.
My husband has an etsy shop, but just recently started selling on shopify. We are in Colorado and he makes everything out of our homes garage. He does not have a physical location besides our home and he does not work with any manufacturers. Does he still need to register for sales tax license? Thank you for your time!
I would only register in CO for now! And watch my most recent video it addresses your question: ruclips.net/video/CV0awU-Qi5Y/видео.html
Thank you for the useful information. I have a quick question: I am a small ecommerce business (Shopify) registered in the State of Florida. I sell internationally using print-on demand, do I have to set up taxes in each country that I sell to or do I only collect taxes from my registered State?
We do not deal with international sales tax. Countries have differing laws that you should be aware of in any country that you sell.
For the US, you are liable for sales tax in any states where you have nexus (physical or economic, as mentioned in the video). For those states, make sure you register for a sales tax permit before collecting from customers in those states.
I actually have exactly the same question... by saying we do not deal with international sales tax, does it mean we do not need to collect sales tax on international sale? Or we need to but details based on which country you are making sales to? Thanks
@@erinyan6167 You may need to based on which countries you have sales in and their laws.
@@LedgerGurus thank you
Excellent video, thank you. I have incorporated an LLC in the state of Delaware due to no sales tax. I am a non-US resident and I am applying for an EIN without an SSN. I have a virtual office only and I intend to sell products on Amazon as using FBA. As I have no direct control over when a product might sell or where the buyer might be located will I still need to collect and pay sales tax? Thank you for your time.
We can give you more individualized help through a consulting call. You can schedule one here: ledgergurus.com/ecommerce-accounting-services/sales-tax/
Hello! I am starting a small business on shopify in Texas soon, am I able to start selling while I wait to receive my permit?
Yes you can as long as you’ve started the registration process with Texas.
I am an existing ecommerce seller (an LLC), registered with my home state, and currently sell only with Marketplace Facilitators (eBay, Amazon, Bonanza, Walmart, Etsy, etc). I file in my state and indicate the overall sales numbers and indicate that all the sales are through Marketplace Facilitators. If I open a Shopfiy or Bigcommerce site and start selling to customers directly, would the threshold information and overall sales for those thresholds consider my Marketplace Facilitator sales as well?
Yes. You need to add all your sales from all your channels to determine nexus and registration/filing requirements when you sell on any channel other than marketplaces only.
Thank you for this info. If i am operating as a sole proprietor and selling tshirts out of my home through an online webstore and have no other partners anywhere and low sales because i am just starting, do i just register with my home state where i am working from?
any info would be appreciated.
Yes that’s correct!
Hi,
As i know Delaware has no sale tax. Does a LLC E-commerce company in Delaware owned by a non-resident person without a physical location have to pay sales tax when selling products to US customers from another states like Wyoming etc. ? Also The products will be shipped from China Warehouse.Thank you in advance!
When you are starting you won’t have to collect taxes anywhere, but as you grow and hit economic nexus you will need to register and collect.
new sub: very informative. Why do wholesalers ask for a sales tax id before talking to us. I am int in starting an ecommerce and just heard shopify does not collect taxes like other marketplace facilitators. Is this still true or has Shopify changed?
Good question. Shopify is not a marketplace facilitator, so they are not required to collect and remit sales tax for you. You have to go in a set that up yourself in the settings. But don't just go in and set it up for every state yet. You want to wait until you have nexus in a state before you register because otherwise it gets very messy. a list of those thresholds, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
In regard to your first question, wholesalers are not required to pay sales tax for wholesale transactions, so they need to make sure you are a business planning to resell their product so the sales tax responsibility falls on you.
@@LedgerGurus yes but they are requiring beforehand even just to inquire. So I ended up getting one just to obtain basic info. If I don’t decide to start. I’ll have to close my sales tax acct.
Hey I have an online e-commerce store... I'm based here in Texas.. My question is, do I charge taxes for customers living in other states besides Texas?
You won't be liable for sales tax in other states, unless you have nexus in those states. The most common ways you would have nexus is if your inventory is held in other states, you have employees in other states, or you have economic nexus in other states.
Economic nexus occurs if you have a large volume of transactions and/or revenue in another state. Each state has differing thresholds, but if you are approaching 200 transactions or $100,000 in sales in any state, you should check their economic nexus laws.
Once you have nexus, you are liable to register, collect, and remit sales tax in a state. If you don't, a State can come after you for the sales tax owed and associated penalties.
@@LedgerGurus Thank you so much. So therefore i shall only be collecting taxes in my own state where my company is registered at! Gotcha...
Yes, just make sure you are registered for a sales tax permit if you are collecting.
Hello, I just open a LLC in WY. I do not live in US, I don’t have stores or employees. Also I receive a couple of days ago my EIN number. I want to create a e-commerce store (print and demand system). As I understand if I do not have any store or employees I do not need to pay taxes. My concern is, if I sell physical products to US clients with the print and demand system (printful) do I need to collect the sales tax? And if yes, do I need to add the sales tax for all the states or only for WY?
No you don’t. And you actually don’t even need to collect in WY even if your business is registered there :)
I’m an e-commerce in Colorado with nexus only in Colorado. How would I set up the taxes for my website if I ship to other states? Would I have to keep track of the sales in each state to make sure I obtain a sales tax registration in those states.
In my Godaddy, I can do that..so whoever your provider, they can walk you through
You'll want to watch your sales in other states so you know when you're approaching economic nexus in them. You can find a list of economic nexus thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can get that here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, we are launching our sales tax course and it will answer all your sales tax questions. For more info, click here - ledgergurus.com/resources/sales-tax-course-updates/
We live in Colorado and an online store thru marketplace and have clients pay sales tax so when I file I'm confused if already collected why do I have to report and what am I reporting? is it collected twice ? Cannot get ahold of Colorado dept of revenue to ask any questions! very disturbing. thanks
Hi! CO DOR still ask you to report your sales and exempt sales amount but they do not expect you to remit any taxes.
If the products I want to sell are digital downloadable documents/products (online courses, design posters, stickers) Do I have to collect taxes on those? I also want to start my business so I will probably not make that much money the first couple of months do I have to register my business? I am located in Idaho. Thank you
Downloadable documents are taxed differently in different states, and it mostly depends on the language you use to market these courses. For now, we suggest looking into those laws in regards to Idaho and register for a sales tax permit if necessary. You can always contact your Department of Revenue if you can't find a good answer. Then, you should monitor sales into other states. Once you approach $100K in annual sales or 200 transactions into another state, it would be time to start looking into their sales tax laws in regards to your type of product. You may need to start registering, collecting, and remitting from customers in those states.
In regards to business registration, you should always register your business with the state you are operating from when you start your business, if you don't make money, you can claim losses using expenses and that'll help your overall income tax liability.
Hello,
I am just starting out making an online shop in my square space website (Business Plan).
The sales tax part,
- Is there a way other than having to manually enter in sales tax rates for every zip code in North Carolina, US?
- If I upgrade to a square-space - Commerce Plan, will it automate the process and calculate sales tax in real time?
- Is TaxJar the only other extension that can do this? Do I still need a TaxJar if I get a Commerce Plan?
Is anyone else in the same boat or past this phase? Any other suggestions? Thank you!
It would probably be best if you scheduled a consultation with one of our sales tax experts. They'll be able to answer all of these questions. Here's the link - calendly.com/ledgergurus-sales-tax
Thank you so much for this video! I just started a small business based in California, but we've already had a few sales in other states (only a handful). I know you mentioned keeping an eye on our sales to know when we hit the nexus threshold. Just to confirm, are we not required to pay taxes to a state based on its nexus laws until we hit that threshold? Want to make sure I'm understanding that. For example, if I only do 100 sales in Michigan this year and generate $10,000, I do not owe taxes on that revenue and should not be registered in Michigan, correct?
Yes that's completely correct! Sales before reaching the threshold is not obligated to have sales tax collected.
@@LedgerGurus Thank you!
But how can someone possibly know the nexus for every single state??? And monitor your transactions for each state?
@@byronjohnson1577 Thanks, I use WP/Woo. I just find it baffling that whenever I buy anything online I ALWAYS pay sales tax - How is it that every business is exceeding the threshold in EVERY state?
@@lodatomedia2604 Many aren’t exceeding the sales. Either they are scared and dont understand how this works. Makes you wonder if they are collecting and not even sending it in. Scary stuff. I’ve had to learn so much in three years about this and have so much more to learn.
Hi, If I am selling through Amazon, what is my registration and filing liability in these two cases:
1. Home State: PA, Inventory in Amazon centers CA, CT, IL. No economic nexus thresholds met
2. Home State: PA, Inventory in Amazon centers CA, CT, IL. Economic nexus thresholds met in GA, MA, NC, TN
Please help
Because you're only selling through Amazon, the marketplace facilitator laws are in effect and you are pretty much off the hook. The only state you need to worry about collecting and remitting in (Missouri) is not one you have nexus in yet. Watch it, though. If you end up with inventory there, you'll need to deal with sales tax there. Their economic nexus law doesn't go into effect until 1/1/2023. If you'd like more detail, you can watch our on-demand webinar "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." - ledgergurus.com/resources/sales-tax-course-updates/
Hello I have an auction house in Iowa. But sell online as well. Im registered in Iowa only. My accountant does not know how to structure it. Do i collect sales tax from everyone out of state and just pay it to Iowa? or do I only collect from Iowa Residents? Or Do I have to register in all 50 states? This seems way to complicated. 😔
Hi! We are here to help! You don't need to collect in other states until you pass their economic nexus threshold. If you have more detailed questions, feel free to schedule a consulting call with us here so we can help you! calendly.com/ledgergurus-sales-tax
How does a state know how many transactions anyone had in that state? Also, eBay collects tax for me and I only do a small amount of sales at my private online store. Do I add my eBay sales and my private sales together to determine nexus in the 50 states? Do I register in 50 states? That sounds impossible. Thank you for any advice.
Yes, you have to add all your sales from all your channels to determine nexus. Only register in the states you have nexus in. We just finished updating our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. The appendix has a list of all the states with their thresholds. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If I am based in Australia and using print on demand services to sell worldwide,what must i do? I have not sold anything yet, launching ads once i know the answer to this. The POD suppliers have warehouses in over 90 countries and predicting where a product will be shipped from, depends on where the customer is located, and what the closest facility is. Much appreciate your time
I can't comment on other countries because we only do US-based sales tax, but I can tell you that a good place to start for US sales tax is to download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It'll give you a good basis in what to expect here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
This whole system needs to be overhaul, it's like you need a degree in taxes to be able to keep your business functioning. Great video, very informative.
We agree. Sales tax is unnecessarily complicated and burdensome - especially for ecommerce.
If ever Shopify seller collected sales tax for a buyer online but does not remit that… economic nexus was not yet reached.how will that be presented in the sales tax return? since it is an online payment, should the payment be returned to the buyer? what will be the treatment?
If sales tax was collected, you need to register voluntarily (even without hitting the economic nexus) or refund the taxes to the customers.
When should you collect sales tasks as a dropshipper? Should you only collect sales tax when your bringing in a certain amount of revenue?
You'll need to start by registering and collecting sales tax for sales in the state where you and your business resides. Remember to register for a sales tax permit before collecting. Then most likely you won't need to worry about sales tax in other states until you reach their economic nexus thresholds as described in the video.
What would be considered as a "significant volume of sales" in a state before I am required to register?
Every state is different, but in general many follow the threshold that was established via the South Dakota vs. Wayfair ruling in 2018 which is $100,000 in sales or 200 transactions per year. Be aware that nexus can also be established in other ways, but that is the economic volume that is most common.
@@LedgerGurus Hi, what happens if you don't claim nexus, but then all of the sudden you get 200 sales in one state, does that mean you now owe taxes even though you did not collect sales tax, due to not thinking you had to?
So I have some good news for you. "200 sales" are the threshold at which sales tax is required. You are not required to pay for those sales, but you are responsible for sales tax on all transactions after that. And congratulations on the increased sales!
We are coming out with a sales tax course specifically meant to teach small business owners about how to navigate the world of online sales tax. For more information, click here: ledgergurus.com/resources/sales-tax-course-updates/
Can you give an example of a marketplace nexus? I am trying to figure out if I use PayPal as a payment processor, of that means that I have a marketplace nexus in California. But the wording I was reading is very unclear and an example would be useful. Thanks!!
Hi! Marketplace nexus applies to marketplace facilitators and sellers. PayPal is a payment processor, not a marketplace facilitator. For example, if you sell on Amazon (marketplace) you have nexus in CA and all the states that have sales tax except MO because Amazon has nexus in all those states. So Amazon's nexus extends to you as a seller.
I have a small apparel brand business in FL through shopify. I have only made $3K with less than 200 sales this past year. I am registered, do i have to charge and or pay sales tax at this point?
I would make sure to charge tax and remit tax from your FL customers. And register with FL of course.
I live in Missouri and sell products to customers in person, I collect sales tax for MO. I am getting ready to start selling online as well, I don’t expect to exceed any nexus thresholds for other states anytime soon.
My question is, if I don’t have to collect sales tax from customers in other states, do I just not charge any tax at all?
Thank you!
Yes that’s correct, don’t tax any sales to out of state customers :)
I am a business in Ohio, do I need to collect sales tax from states other than Ohio... I saw that we are an origin state and our lows are slightly different but it can be very confusing at times. Thanks in advance.
Hi Lyssi. You will only need to collect sales tax in other states when you have nexus in a state. One of the most common ways to have sales tax nexus is if your inventory is ever stored in another state (often through Amazon FBA), then you would need to collect sales tax for all sales in that state. Or if you reach a certain number of sales in a state you ship to (economic nexus). Here's some information on economic nexus thresholds: ledgergurus.com/blog/ecommerce-sales-tax-and-economic-nexus/
I am thinking of starting an online shop using Shopify and would be using a drop-shipper to fulfill orders and they ship the products for me, they are based in California and I am based in Georgia. Do I need to register for a sales tax permit with my home state right away even though I have zero sales and just launched my website (I am still in the research phase, so no website yet)?
Also, do I have nexus with CA with the drop-shipper? They create and package up the products and ship them out to the customers and I never see the product. I don't know if that qualifies as a "warehouse"?
Lastly, how does shipping taxes work? Is that on a threshold base as well? Or are shipping taxes lumped in with sales tax when you make either 200 annual sales / $100k+ within a single state?
We suggest registering with GA because that’s your home state and you have physical presence there. You don’t have nexus in CA because of the drop shipper. The economic threshold base looks at sales amount and you don’t need to include shipping.
@@LedgerGurus If I charge shipping then will that need to be taxed?
@@LillyEve1 Shipping needs to be taxed in some states, not all the states. Here is a good guide from Avalara: www.avalara.com/us/en/blog/2018/11/how-to-handle-sales-tax-on-shipping-a-state-by-state-guide.html#:~:text=If%20one%20delivery%20charge%20includes,a%20taxable%20sale%20are%20exempt.
I`m a new retailer can someone answer this.When people try to purchase taxable items on fodd stamps like soda and nutrition items , should we charge tax on them or no ? if we don`t them we are not paying sales taxes on these items and that can trigger an audit ?
According to this, no - ask.usda.gov/s/article/Can-sales-tax-be-charged-on-items-I-bought-with-Supplemental-Nutrition-Assistance-Program-benefits#:~:text=Oct%206%2C%202022&text=No%2C%20retailers%20cannot%20charge%20sales,Assistance%20Program%20(SNAP)%20benefits.
I'm really trying to understand this. I will be selling digital video content that people download. I live in CA and have an S Corp. 1. Do I still apply for a Sales Tax ID? 2. Since I'll be selling in all 50 states, do I set them all up to receive sales tax? 3. What about international sales?
Yes, if you are selling in all 50 states, you will have to deal with sales tax. However, you don't have to register with each state until you pass its economic nexus laws. We have an appendix with those thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can download it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. We are in the process of updating it, and when you download the current one, you're automatically on the list to receive the new one when it comes out.
We don't work with international sales tax, so you'll have to get that info somewhere else. :)
Hello LedgerGurus, I had been watching a few of your videos, all very informative. Thank you. I have some questions and hope you can help me:
1. I am a non US Citizen. I am planning on selling online via Shopify using a 3PL fulfillment center based in FL. So, I guess I need to register for sales tax in FL since that is where my 3PL is based?
2. I have not started selling yet so, do I need to apply before I start?
3. My other question is, do I need to register for EIN or ITIN as a company or individual for other tax requirement?
Thank you for your time.
Having a 3PL handle your inventory does create nexus in FL. If you have nexus in other states then you need to register before collecting tax but not before selling products. And our clients usually register for an EIN.
@@LedgerGurus Thanks. I just want to Make sure I understand it correctly. I will have inventory there stored in a 3PL warehouse. And the 3PL despatch the goods for me as and when I get orders online. So, do I need to collect sales tax in FL as I think that is my Nexus even though I am not a US citizen or living in the US?
@@senoraTam Thanks for following up. We read through that question too quickly. Because your 3PL stores and handles your inventory, this does create nexus for you in FL. Thanks!
Hi I am wanting to do online print on demand tshirts. So i guess that in a way in dropshipping due to the fact that I the seller never have inventory nor see it, I put design on shirt through computer pay the product and the print on demand company does the fullfillment. Do I have physical presence? Do I automatically have physical nexus in my home state just because I live here?
Hi Yulis, you do have physical presence in your home state because you live there. We suggest you just monitor your economic nexus threshold per state by sales revenue and volume.
@@LedgerGurus thank you
Hi, I'm under 18 and have a Shopify account that I pay the monthly subscription on, and I have a few questions I hope you can answer. (Disclaimer: I'm from the US)
1. If I change the Shopify account to my parent's name, will they have to pay the Shopify account's taxes?
2. When registering for Stripe for Shopify, should I use all of my parent's information?
3. When creating a PayPal account, can I put it under my parent's name and use my high school checking account debit card?
4. Is there any way I could have money sent to my account without Shopify shutting down my store?
Since you're under 18, you need to do all of this under a parent's name.
I’m based in GA with an LLC. I sell on eBay/poshmark. Those companies are collecting sales tax on behalf of the buyers state. Do I only collect Sales tax for GA buyers?
Yes but since they are collecting and remitting for you, you don’t owe the state anything. You might still need to report the sale and take the whole amount as a deduction though.
I have a question plz. I have exceeded the sales nexus last year so I filed sales tax return in maine state but this year I did not exceed the threshold so what should I do??
Maine’s economic nexus threshold applies to current and prior calendar year. So even if you don’t pass the threshold this year, as long as you passed it last year you will need to keep filing. If there are two years in a row that you don’t pass the economic nexus threshold then you can de-register and stop filing.
@@LedgerGurus this means that I have to collect sales tax from customers, right?
plus could you plz tell me the process of deregistration and the source if this information?
Thank you so much for your help
@@mahmoudfarag4136 if you have nexus in Maine, then you need to keep collecting and filing. You can file a final return or call the department of revenue to cancel the license.
Hello! I have a question if anyone could please help me out. So I know to collect the tax you need your sales tax ID of course. However, I was wondering if I could use my EIN number as the sales tax ID instead. I received it through the IRS.gov website.
Hi! You can’t use your EIN, you have to register with each state and they will issue you a specific tax ID to that state. Although there are a few states that will keep their tax ID same as your EIN, but you still need to register with the states and be in their systems.
@@LedgerGurus Hey! thanks for letting me know! Sorry to bother again but I have one more burning question. I am dropshipping, and I am located in Illinois while my supplier is in china. To collect tax, do I need to register a sales tax id with every single state even though I am only in Illinois?
@@vrsuhfx only in states where you have nexus. Then you will need to collect and remit for customers in those states. Since you are located in Illinois, you have physical nexus there. Then you will need to worry about checking economic nexus thresholds in other states as you approach $100K in annual sales or 200 transactions in any other states. Best of luck!
What about selling courses online on a website?
It's an intangible asset because there is no physical course; the students would do it on the same website.
Do those types of companies have to pay sales taxes? What about who sells courses is not an entity (LLC) but a sole proprietor? Thanks
Depends on the state. Generally, online courses that are pre-recorded are usually taxed, but if there’s any live interaction with the instructor, it becomes a service and is not taxable.
Thx for the great informative vid! You're amazing for taking the time to respond to everyone too. I was waiting to get a sales tax id until I actually had a successful website with consistent sales. I went thru like 19 different shopify stores in the last 2 and a half years. Apparently I now have 2 successful stores with consistent sales cause I got a notification from shopify on both stores that says I may have a tax liability in 1 state and should start collecting sales tax. Both notifications say its my home state (nexus state). Both stores are less than 100k each but together are a little over 100k. So not that successful, just consistent. Does shopify report my income to the state like they report my income on 1099 to the IRS? Since its two different shopify stores that are two different brands, should I get two different tax id's for each store? Or just use one tax id for both stores? Since I am barely collecting sales tax as soon as I get my sales tax id, am I still liable for past sales?
I answered part of this question over on the other video you submitted a comment on. Technically you are still liable for past sales, but it's unlikely that amount was very much. You'll have to weigh the risks of not remitting that amount vs the practicality of it. I suggest you watch our sales tax masterclass called "The Uncomplicated Truth about Sales Tax." We go over this idea in that.
And no, Shopify doesn't report your sales to the states.
@@LedgerGurus Hi I'd like to know do I as a reseller need to collect sales tax in case our supplier/manufacturer doesn't charge sales tax?
@@akindia8519 hi! I replied to your question on the other video! Let me know if you have more questions!