Thanks for watching! If you're interested in learning more about nexus, check out our free masterclass "The Uncomplicated Truth about Sales Tax" - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax. Need more help with your sales tax? Contact us here - ledgergurus.com/services/sales-tax/ OR download our complete guide to sales tax compliance - ledgergurus.com/services/sales-tax/ OR download our complete guide to sales tax compliance - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/.
FINALLY!! Thank you, thank you! I appreciate you taking the time to make these videos. My online store is going live TOMORROW and I have been stressing out about the fact that my Checkout is not showing tax for where the items are going. I HAVE NO NEXUS THERE!!! This is such a great video series. I have subscribed and feel much more confident now going forward with respect to tax compliance.
Thank you!! Because of your explanation in some of the videos I have watched, I have started to understand the complex sales taxes. But what I am not still clear is about the inventory we have in Amazon warehouses. Does it mean we have a physical presence in that state? Does it depend on the amount of inventory we have in other states? Or in the end, it doesn't matter how much inventory we have in other states Amazon warehouses because it is a marketplace facilitator?
The answer to your first question is that it depends because different states look at FBA inventory differently. Yes, because Amazon is a marketplace, you don't need to worry about sales tax since it's taking care of it for you. The only time it'll matter is if you're selling on other, non-marketplace platforms as well. If so, you'll need to take your inventory locations and Amazon sales into account to determine where you have nexus and need to collect sales tax with your other platforms.
Thank you for amazing contents. I just want to know that if having a resale Dropship partnership with US brands form a physical nexus or not? Thanks for help.
We have only physical nexus in CA and thresholds for economic nexus have never been met in any other state during the differing time periods each state dictates. My question is seemingly complex and there's still a level of uncertainty. Let's use $100k as the threshold amount and a calendar year as examples for my questions 1.) Since we have never exceeded the economic thresholds we are not yet required to collect, remit or register in the other states but what happens when we do hit or exceed a threshold? Are we subject to back taxes for the previously sold $100k threshold amount? Or does the collection, liability and obligation begin once you surpass that amount? 2.) Once the threshold is exceeded and you are registered are you required to collect and remit forever after? For instance, what if in year 1 your revenue into a given state is $101k . Are you liable for remitting sales tax on $1,000 or $101,000? Year 2 is flop and you only sell $5,000. Year 3 you do $98,000 into same state. Are you required to collect sales tax on the $5,000 for year 2 since you exceeded threshold in year 1? Since year 2 was beneath the threshold are you required to collect sales tax on the $98,000 for year 3? Since the threshold has a duration of time associated with it is the assessment of liability and to or not to collect sales tax made each year (or respective timeframe)? Last questions 3.) What if you were unsure if you were required to collect sales tax in all states so you thought "better safe than sorry" and are collecting in all states but are not registered or required to do so in any of them. How do you approach repayment of the taxes collected without being penalized or being required to register when you do not need to?
Ok, I'm going to do my best to answer all of the questions you have in here. They're really all variations of the same question. 1) You are NOT subject to back taxes for the amounts sold BEFORE you exceed the threshold. Your responsibility begins AFTER you pass the threshold. 2) The threshold is determined in 12-month increments. You'll need to pay attention to your sales. If you see them starting to decrease, see what that does to what you've sold in the past 12 months. If you drop below the threshold, you don't have to pay, though you may have to send in a $0 return so the state doesn't assign you any fees on payments it expects you to send in. 3) If you've already collected taxes in states you haven't registered in, you have two choices: register and remit the amounts to the states (but now you're on the state's radar (see answer 2)) or send the money back to the customers.
@@LedgerGurus thank you so much for your response. There's honestly not a concise explanation of this anywhere and you did a great job of explaining it. New sub! Do you guys do CPA for hire work too?
@@bbq_boardsI'm not sure what you mean by CPA for hire, but we do have sales tax services available: ledgergurus.com/ecommerce-accounting-services/sales-tax/
You have a gift for explaining a complex topic! I also watched your video on "2020 Sales Tax Apps for Online Sellers". I am considering using a Sales Channel/Platform for selling eBooks, but the only "integration" (it's actually a webhook, not a native integration) they have is with Quaderno. Do you know how they compare to the three companies you reviewed in the 2020 video? Thanks.
Thank you so much for the positive feedback! We don’t currently have clients using quarderno but I’ve heard good things about it. I’d love to learn more about it! If you need any help or a second set of eyes, reach out to us and I’d love to join you on a demo call!
@LedgerGurus Doesn't look like my reply to your reply went through? Anyways, just wanted to let you know that I'm still in the early stages of business planning so if I end up using Quaderno I'll let you know about my feedback on the app. I really appreciate your offer of help if I do end up using it. Thanks!
@ledgerGurus question for those who know: Business is registered in Pennsylvania. I live in New York (and my inventory is here in my apartment). Need to register for sales tax in both states it seems. BUT If I sell a 70 dollar shirt to someone in Colorado, will shopify just sell the shirt at $70 straight up plus shipping and not charge any tax? Assuming i am still under economic nexus in Colorado, Would the customer pay no sales tax? So I wouldnt collect any tax or owe any tax for this sale?
Hey, I went through your videos and you guys have awesome content. But I still have a doubt like I am based out of Canada, I have a business registered in the USA, my supplier are also based out of USA and I sell in the USA as well. Am I obliged to register for sales tax? Also do I need to have the Reseller Certificate to carry out my business in the USA???
You're only responsible for sales tax where you have nexus, either with a physical presence or by passing the economic thresholds. Watch this video for more information about getting reseller certificates: ua-cam.com/video/Cn-vsd4HlTE/v-deo.html. If you need answers to more questions that are specific to your business, I encourage you to schedule a sales tax consultation with one of our experts. You can do that here: calendly.com/ledgergurus-sales-tax/?
Thank you For this detailed information, it is really helpful. I'm launching my Shopify store in the next few days, and my question is: do I need to register an economic nexus in all states before I start selling? Or do I have to register only when I reach the economic/transaction threshold in a state?
Good question. No, you do not need to register for a sales tax permit in a state until AFTER you hit the economic threshold there. The only state/s you're responsible for at first are the state your business is registered in and wherever you have your inventory. If you're dropshipping, you don't need to worry about that since you don't actually own your inventory.
Love this video! I had a question about now nexus applies to Print on Demand services. If the printing service is located and mailing out your product in a different state from your business address, do you need to register in that state?
So until I pass the threshold nexus in a state I don’t have to worry about sales taxes there? Say I have 100 sales in illinois Florida and New York (300 total) i wouldn’t have to register?
No. You don't have register with a state until after you pass its economic nexus threshold or if you have physical presence there. For a complete and updated list of thresholds, see the appendix at the end of this download: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
HI I checked your channel playlists, i couldn't find any information on Federal tax filing and Return for amazon Sellers to IRS if you already have content on it, please share the link if not, I will be looking forward to your content on the topic
We don't do income tax filings, so we don't have any content on it. The only thing we have is this video that explains the discrepancies between an Amazon1099 and your books - ua-cam.com/video/IWa4KZlATh8/v-deo.html
Thank you for the detail information. they are really helpful. I just started my Shopify store, so I guess it doesn't make sense for me to register nexus in every states. But my question is, do I only mark the setting in my Shopify account to only collect tax in my own state? Thanks
Hi, so I use my house as workspace and keep some products (also I rent a storage space to store my products). Is this meaning I have a physical nexus in the state that I'm living in? Also, since my online sale is typically low and won't reach 100K threshold, I can only charge to my state and not the rest of the States, till I meet economic nexus? Did I understand correctly?? So, I just collect tax from my state that I registered my business?
Question, I took over a position that has been collecting sales tax for each and every state. We have no online sales and do not meet the thresholds. Do I have to file zero reports and file through the local state. Can I close the accounts or do they now have to be filed? We are a manufacturer to retail. Thank you!
This sounds a bit complicated. I suggest you schedule a sales tax consultation to speak with one of our sales tax experts directly - calendly.com/ledgergurus-sales-tax/
Great video!! So to determine economic nexus, if we are selling items on both Amazon and Shopify, do we add the combined total of transactions and gross sales from each platform to determine economic nexus or would we essentially only use the Shopify data for nexus determination? Thank you!
Depending on the state, you still need to register, but you'll be filing $0 returns. You can get advice for your specific question in a consultation with one of our sales tax experts - calendly.com/ledgergurus-sales-tax/?
If company makes 200 transactions at $20 each in the State with 200 transactions threshold selling digital products online, will company have economic Nexus in that State? Thanks.
There are a lot of variables at play here. Economic nexus thresholds are different by state, and each state has different rules regarding taxing different types of digital products. So, I can't give you a definite answer. However, if a state had 200 transactions as part of its threshold and taxed that particular kind of digital product, then yes, that company would have nexus there.
Thank you for your excellent videos. May I ask if I have something straight? I'm new to ecommerce and looking at selling Printful POD products in the US (like everyone else, I know!). I'm in Australia though. I don't have economic nexus anywhere, but am I right thinking that if a customer in a US state where Printful physically creates and fulfils their order that this would create a physical nexus for me and therefore I would be required to collect and remit sales tax? But orders from any other states I wouldn't need to, unless I achieved the economic/volume thesholds there? Thanks for any response you can give. Subscribed :)
No, because technically you don't own the inventory. Because you don't own it, you don't have physical presence there. We're publishing a video next Wednesday, Dec 6th that will explain this in a bit more detail. In the meantime, physical presence is created by people and property. If you have neither in a state, you don't have physical presence.
@@LedgerGurus Thanks so much for answering my question. I guess I misunderstood that I'd have presence kind of by proxy (Printful), for want of a better term. Anyway, that's great to know, truly appreciated! I look forward to your explainer video.
If I collect tax from my customers who leave in another state and I don’t reach the Nexus threshold. What happens? Am I obliged to return the money to the customers? How companies know when they will reach the Nexus. It is so hard 😢
Yes, you do need to either return the money to the customers or remit it to the states. It's your choice, but it's probably easier to send it back to the customer. Depending on what sales channel you're using, you can probably see in your dashboard where you're getting close to reaching nexus. You can also find a complete list of states with their economic nexus thresholds in the appendix of our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi, Let’s assume that my supplier has a nexus in f.e. Texas, but I don’t have one in this state. After we will use the Resale certificate for the purchase with my supplier, I will not pay sales tax to my supplier, but the question is - do I have to charge my client (from Texas) sales tax for this purchase?
You can only use a resale certificate AFTER you have nexus in a state and have registered for a sales tax permit. Sounds like you don't qualify to do that since you don't have nexus there yet.
Question. I have a shopify online store. I have no physical brick and motor store, but I'm based out of California. I use vendors out of state in which I buy it at wholesale price for resale. I do not stock any inventory. Customer buys the product from store. I collect payment and buy the product from the vendor and vendor ships the product to the customer. Do I have to add those vendors in my locations for shopify as fulfillment locations and does that make it a physical or economic nexus and have to star collecting taxes?
No, you don't need to add vendors as fulfillment locations. That would mean you have a warehouse, which it sounds like you don't. You don't have to collect taxes from a state where a vendor is because that product doesn't belong to you. It sounds like drop shipping. Here's another video that explains how sales tax works with dropshippers: ua-cam.com/video/suUqOj3bhvs/v-deo.html&pp=gAQBiAQB
Thank you so much for your video! I have a question though. If my small e-commerce business (sole proprietorship) is registered in Florida but I live in Oahu Hawaii 6 MONTHS out of the year, do I have to register my business there too in order to do sales (shipping) from there too? (I asked the same question on another video you made in 2020 but don't know if you're gonna see it lol) Thanks xx
Does a business economic nexus/sales reset annually in all states that count towards the threshold? For example, if a business has sales in all states, but does not meet the threshold, does the dollar/transaction amount(s) for nexus reset to 0 annually?
Hello! I found this video today while trying to determine information about physical vs economic nexuses for sales tax. I have a question if you have a moment. I am an individual without a registered company. I have no warehouses/employees, and the products I sell are kept in my own home (no significant inventory). Is this enough to qualify as having a physical nexus? I expect that sales will be significantly less than the economic threshold, but many explanations of physical nexuses make it sound like just me living in my own home and selling a few items online would be enough to qualify as having a physical nexus. Is that true or no?
You living in a state and doing business is sufficient enough to qualify as physical nexus in your home state. I would only register in your home state and collect sales tax from customers that live in your state and worry about economic nexus in other states later.
Thank you so much for these insights ! I am a european based company and I will start to sell in the USA. My 3Pl has 2 storage warehouse in 2 states so I assume I will have to apply for a sales permit there. I have one question : If I sell on shopify to customer based in states where I am under nexus treshold and not registered for sales permit, what happens ? Is there no sales tax at all or will my customers have to declare the sales and pay the tax themselves ? (I don't want to decrease their experience..) many thanks in advance for you help !
There will be no sales tax at all if you don’t meet the economic nexus threshold and the customers are required legally to pay and report use tax on their federal income tax return but not many US citizens actually do that.
We have a company in Delaware and we will open a store on Shopify for US buyers. We sent the products from China. So should we collect the sales tax from US buyers?
We are getting ready to publish a bunch of information on US sales tax compliance for non-US residents in the next few weeks. We’ll also have several UA-cam videos that go along with it. In the meantime, you can start with our downloadable resource “10 Steps to Ensure Sales Tax Doesn’t Burn Down Your eCommerce Business.” It has a section on nexus that I think you will find interesting. You can find it by clicking here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Thank you so much for the informative video! So I have a question, I will have physical nexus in GA for a shopify print on demand store, so I assume I will need to immediately start collecting sales tax at GA rate, but if sell to someone in a different state (after I have reached the trasaction number of sales level), do I need to collect tax for both GA and the other state? Thanks!
Yes you will need to register and collect in GA immediately. But note that you are only collecting on sales going to GA addresses. When you hit economic nexus in other states, you will collect and remit sales going into those states to those states. So you will never be double taxed. Let us know if that doesn’t make sense.
@@LedgerGurus OK that helps out a lot! So even though I am registered for GA, my sales tax is only for people who are shipping items to GA, so the sales tax collected is only based on the state the customer is in. So what about when I possibly scale my business to hold in a warehouse in GA, same rules apply? Only collect on those who also live in GA?
@@codywaits4012 yes that’s correct! If you have physical presence in GA, then you have nexus, then you collect sales tax on products shipped to GA customers.
@@LedgerGurus English is my second language and I just want to confirm. I live in California and I just open a shopify store. Does it mean I only need to collect sale tax in CA? I don’t have to collect sale tax for sale going to other states Not untill it reach to certain amount of transactions in those states, right? Thanks
Thanks for watching! If you're interested in learning more about nexus, check out our free masterclass "The Uncomplicated Truth about Sales Tax" - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax.
Need more help with your sales tax? Contact us here - ledgergurus.com/services/sales-tax/ OR download our complete guide to sales tax compliance - ledgergurus.com/services/sales-tax/ OR download our complete guide to sales tax compliance - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/.
FINALLY!! Thank you, thank you! I appreciate you taking the time to make these videos. My online store is going live TOMORROW and I have been stressing out about the fact that my Checkout is not showing tax for where the items are going. I HAVE NO NEXUS THERE!!! This is such a great video series. I have subscribed and feel much more confident now going forward with respect to tax compliance.
We are so glad you found it helpful! Please feel free to reach out if you have more questions! Happy selling!
After 3 videos and some articles this one finally made it really clear. Thanks.
So glad! Let us know if you have any further questions!
Another great video! I can tell that you are very passionate about this! Keep it up!
Thank you.
OMG, Thank you so much this helped so much!
So glad it was helpful!
Thank you!! Because of your explanation in some of the videos I have watched, I have started to understand the complex sales taxes. But what I am not still clear is about the inventory we have in Amazon warehouses. Does it mean we have a physical presence in that state? Does it depend on the amount of inventory we have in other states? Or in the end, it doesn't matter how much inventory we have in other states Amazon warehouses because it is a marketplace facilitator?
The answer to your first question is that it depends because different states look at FBA inventory differently. Yes, because Amazon is a marketplace, you don't need to worry about sales tax since it's taking care of it for you. The only time it'll matter is if you're selling on other, non-marketplace platforms as well. If so, you'll need to take your inventory locations and Amazon sales into account to determine where you have nexus and need to collect sales tax with your other platforms.
This was extremely helpful! Thank you!
Glad it was helpful!
Thank you for amazing contents. I just want to know that if having a resale Dropship partnership with US brands form a physical nexus or not? Thanks for help.
No. You do not own the inventory, so you do not have a physical presence in that state.
@@LedgerGurus In that case, Do I have to charge sales tax to my buyers if I make a tax-exempt purchase from my suppliers? Thank you for your help.
We have only physical nexus in CA and thresholds for economic nexus have never been met in any other state during the differing time periods each state dictates. My question is seemingly complex and there's still a level of uncertainty. Let's use $100k as the threshold amount and a calendar year as examples for my questions 1.) Since we have never exceeded the economic thresholds we are not yet required to collect, remit or register in the other states but what happens when we do hit or exceed a threshold? Are we subject to back taxes for the previously sold $100k threshold amount? Or does the collection, liability and obligation begin once you surpass that amount? 2.) Once the threshold is exceeded and you are registered are you required to collect and remit forever after? For instance, what if in year 1 your revenue into a given state is $101k . Are you liable for remitting sales tax on $1,000 or $101,000? Year 2 is flop and you only sell $5,000. Year 3 you do $98,000 into same state. Are you required to collect sales tax on the $5,000 for year 2 since you exceeded threshold in year 1? Since year 2 was beneath the threshold are you required to collect sales tax on the $98,000 for year 3? Since the threshold has a duration of time associated with it is the assessment of liability and to or not to collect sales tax made each year (or respective timeframe)? Last questions 3.) What if you were unsure if you were required to collect sales tax in all states so you thought "better safe than sorry" and are collecting in all states but are not registered or required to do so in any of them. How do you approach repayment of the taxes collected without being penalized or being required to register when you do not need to?
Ok, I'm going to do my best to answer all of the questions you have in here. They're really all variations of the same question.
1) You are NOT subject to back taxes for the amounts sold BEFORE you exceed the threshold. Your responsibility begins AFTER you pass the threshold.
2) The threshold is determined in 12-month increments. You'll need to pay attention to your sales. If you see them starting to decrease, see what that does to what you've sold in the past 12 months. If you drop below the threshold, you don't have to pay, though you may have to send in a $0 return so the state doesn't assign you any fees on payments it expects you to send in.
3) If you've already collected taxes in states you haven't registered in, you have two choices: register and remit the amounts to the states (but now you're on the state's radar (see answer 2)) or send the money back to the customers.
@@LedgerGurus thank you so much for your response. There's honestly not a concise explanation of this anywhere and you did a great job of explaining it. New sub! Do you guys do CPA for hire work too?
@@bbq_boardsI'm not sure what you mean by CPA for hire, but we do have sales tax services available: ledgergurus.com/ecommerce-accounting-services/sales-tax/
Amazing! Thank you
You're very welcome.
You have a gift for explaining a complex topic! I also watched your video on "2020 Sales Tax Apps for Online Sellers". I am considering using a Sales Channel/Platform for selling eBooks, but the only "integration" (it's actually a webhook, not a native integration) they have is with Quaderno. Do you know how they compare to the three companies you reviewed in the 2020 video? Thanks.
Thank you so much for the positive feedback! We don’t currently have clients using quarderno but I’ve heard good things about it. I’d love to learn more about it! If you need any help or a second set of eyes, reach out to us and I’d love to join you on a demo call!
@LedgerGurus Doesn't look like my reply to your reply went through? Anyways, just wanted to let you know that I'm still in the early stages of business planning so if I end up using Quaderno I'll let you know about my feedback on the app. I really appreciate your offer of help if I do end up using it. Thanks!
Really insightful video.
Glad you enjoyed it
@ledgerGurus
question for those who know: Business is registered in Pennsylvania. I live in New York (and my inventory is here in my apartment). Need to register for sales tax in both states it seems. BUT If I sell a 70 dollar shirt to someone in Colorado, will shopify just sell the shirt at $70 straight up plus shipping and not charge any tax? Assuming i am still under economic nexus in Colorado, Would the customer pay no sales tax? So I wouldnt collect any tax or owe any tax for this sale?
That is correct. If you don't have nexus in a state, you don't have to worry about sales tax.
Hey,
I went through your videos and you guys have awesome content. But I still have a doubt like I am based out of Canada, I have a business registered in the USA, my supplier are also based out of USA and I sell in the USA as well. Am I obliged to register for sales tax? Also do I need to have the Reseller Certificate to carry out my business in the USA???
You're only responsible for sales tax where you have nexus, either with a physical presence or by passing the economic thresholds. Watch this video for more information about getting reseller certificates: ua-cam.com/video/Cn-vsd4HlTE/v-deo.html. If you need answers to more questions that are specific to your business, I encourage you to schedule a sales tax consultation with one of our experts. You can do that here: calendly.com/ledgergurus-sales-tax/?
Thank you
For this detailed information, it is really helpful. I'm launching my Shopify store in the next few days, and my question is: do I need to register an economic nexus in all states before I start selling? Or do I have to register only when I reach the economic/transaction threshold in a state?
Good question. No, you do not need to register for a sales tax permit in a state until AFTER you hit the economic threshold there. The only state/s you're responsible for at first are the state your business is registered in and wherever you have your inventory. If you're dropshipping, you don't need to worry about that since you don't actually own your inventory.
Love this video! I had a question about now nexus applies to Print on Demand services. If the printing service is located and mailing out your product in a different state from your business address, do you need to register in that state?
This video will thoroughly explain sales tax for dropshipping - ua-cam.com/video/suUqOj3bhvs/v-deo.html.
So until I pass the threshold nexus in a state I don’t have to worry about sales taxes there? Say I have 100 sales in illinois Florida and New York (300 total) i wouldn’t have to register?
No. You don't have register with a state until after you pass its economic nexus threshold or if you have physical presence there. For a complete and updated list of thresholds, see the appendix at the end of this download: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
HI
I checked your channel playlists, i couldn't find any information on Federal tax filing and Return for amazon Sellers to IRS
if you already have content on it, please share the link
if not, I will be looking forward to your content on the topic
We don't do income tax filings, so we don't have any content on it. The only thing we have is this video that explains the discrepancies between an Amazon1099 and your books - ua-cam.com/video/IWa4KZlATh8/v-deo.html
Thank you for the detail information. they are really helpful. I just started my Shopify store, so I guess it doesn't make sense for me to register nexus in every states. But my question is, do I only mark the setting in my Shopify account to only collect tax in my own state? Thanks
Yes that’s correct! I have a video on step by step guide to set up everything sales tax related! Let me know if you can’t find it!
Hi, so I use my house as workspace and keep some products (also I rent a storage space to store my products). Is this meaning I have a physical nexus in the state that I'm living in? Also, since my online sale is typically low and won't reach 100K threshold, I can only charge to my state and not the rest of the States, till I meet economic nexus? Did I understand correctly?? So, I just collect tax from my state that I registered my business?
Yes. You've got it.
this is so helpful!! thank you! I'm so happy I found your content!!
You're so welcome!
YOu are so brilliant
Thank you. Happy to help!
Question, I took over a position that has been collecting sales tax for each and every state. We have no online sales and do not meet the thresholds. Do I have to file zero reports and file through the local state. Can I close the accounts or do they now have to be filed? We are a manufacturer to retail. Thank you!
This sounds a bit complicated. I suggest you schedule a sales tax consultation to speak with one of our sales tax experts directly - calendly.com/ledgergurus-sales-tax/
Great video!! So to determine economic nexus, if we are selling items on both Amazon and Shopify, do we add the combined total of transactions and gross sales from each platform to determine economic nexus or would we essentially only use the Shopify data for nexus determination? Thank you!
You will use both for determining whether you have nexus or not, but your risk exposure is only from your Shopify sales.
If a reach economic nexus but I am reselling to tax exempt entities do i still need to register with a state and file a return
Depending on the state, you still need to register, but you'll be filing $0 returns. You can get advice for your specific question in a consultation with one of our sales tax experts - calendly.com/ledgergurus-sales-tax/?
If company makes 200 transactions at $20 each in the State with 200 transactions threshold selling digital products online, will company have economic Nexus in that State? Thanks.
There are a lot of variables at play here. Economic nexus thresholds are different by state, and each state has different rules regarding taxing different types of digital products. So, I can't give you a definite answer. However, if a state had 200 transactions as part of its threshold and taxed that particular kind of digital product, then yes, that company would have nexus there.
Thank you for your excellent videos. May I ask if I have something straight? I'm new to ecommerce and looking at selling Printful POD products in the US (like everyone else, I know!). I'm in Australia though. I don't have economic nexus anywhere, but am I right thinking that if a customer in a US state where Printful physically creates and fulfils their order that this would create a physical nexus for me and therefore I would be required to collect and remit sales tax? But orders from any other states I wouldn't need to, unless I achieved the economic/volume thesholds there? Thanks for any response you can give. Subscribed :)
No, because technically you don't own the inventory. Because you don't own it, you don't have physical presence there. We're publishing a video next Wednesday, Dec 6th that will explain this in a bit more detail. In the meantime, physical presence is created by people and property. If you have neither in a state, you don't have physical presence.
@@LedgerGurus Thanks so much for answering my question. I guess I misunderstood that I'd have presence kind of by proxy (Printful), for want of a better term. Anyway, that's great to know, truly appreciated! I look forward to your explainer video.
@@ianyoung106Glad to help!
If I collect tax from my customers who leave in another state and I don’t reach the Nexus threshold. What happens? Am I obliged to return the money to the customers? How companies know when they will reach the Nexus. It is so hard 😢
Yes, you do need to either return the money to the customers or remit it to the states. It's your choice, but it's probably easier to send it back to the customer. Depending on what sales channel you're using, you can probably see in your dashboard where you're getting close to reaching nexus. You can also find a complete list of states with their economic nexus thresholds in the appendix of our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi, Let’s assume that my supplier has a nexus in f.e. Texas, but I don’t have one in this state. After we will use the Resale certificate for the purchase with my supplier, I will not pay sales tax to my supplier, but the question is - do I have to charge my client (from Texas) sales tax for this purchase?
You can only use a resale certificate AFTER you have nexus in a state and have registered for a sales tax permit. Sounds like you don't qualify to do that since you don't have nexus there yet.
Question. I have a shopify online store. I have no physical brick and motor store, but I'm based out of California. I use vendors out of state in which I buy it at wholesale price for resale. I do not stock any inventory. Customer buys the product from store. I collect payment and buy the product from the vendor and vendor ships the product to the customer.
Do I have to add those vendors in my locations for shopify as fulfillment locations and does that make it a physical or economic nexus and have to star collecting taxes?
No, you don't need to add vendors as fulfillment locations. That would mean you have a warehouse, which it sounds like you don't. You don't have to collect taxes from a state where a vendor is because that product doesn't belong to you. It sounds like drop shipping. Here's another video that explains how sales tax works with dropshippers: ua-cam.com/video/suUqOj3bhvs/v-deo.html&pp=gAQBiAQB
Thank you so much for your video!
I have a question though. If my small e-commerce business (sole proprietorship) is registered in Florida but I live in Oahu Hawaii 6 MONTHS out of the year, do I have to register my business there too in order to do sales (shipping) from there too? (I asked the same question on another video you made in 2020 but don't know if you're gonna see it lol) Thanks xx
Hi! We just replied to your question on the other video!
Does a business economic nexus/sales reset annually in all states that count towards the threshold? For example, if a business has sales in all states, but does not meet the threshold, does the dollar/transaction amount(s) for nexus reset to 0 annually?
Yes most of them reset on a calendar year basis!
Hello! I found this video today while trying to determine information about physical vs economic nexuses for sales tax. I have a question if you have a moment.
I am an individual without a registered company. I have no warehouses/employees, and the products I sell are kept in my own home (no significant inventory). Is this enough to qualify as having a physical nexus? I expect that sales will be significantly less than the economic threshold, but many explanations of physical nexuses make it sound like just me living in my own home and selling a few items online would be enough to qualify as having a physical nexus. Is that true or no?
You living in a state and doing business is sufficient enough to qualify as physical nexus in your home state. I would only register in your home state and collect sales tax from customers that live in your state and worry about economic nexus in other states later.
Thank you so much for these insights !
I am a european based company and I will start to sell in the USA. My 3Pl has 2 storage warehouse in 2 states so I assume I will have to apply for a sales permit there.
I have one question : If I sell on shopify to customer based in states where I am under nexus treshold and not registered for sales permit, what happens ? Is there no sales tax at all or will my customers have to declare the sales and pay the tax themselves ? (I don't want to decrease their experience..)
many thanks in advance for you help !
There will be no sales tax at all if you don’t meet the economic nexus threshold and the customers are required legally to pay and report use tax on their federal income tax return but not many US citizens actually do that.
@@LedgerGurus thank you so much ☺️
So I am only doing Amazon FBA, and Amazon sends my inventory to other fulfillment centers, does that create physical nexus? Thank you.
Yes, inventory in Amazon warehouses does create a physical nexus.
@@LedgerGurus In your video you said it does not.
We have a company in Delaware and we will open a store on Shopify for US buyers. We sent the products from China. So should we collect the sales tax from US buyers?
We are getting ready to publish a bunch of information on US sales tax compliance for non-US residents in the next few weeks. We’ll also have several UA-cam videos that go along with it. In the meantime, you can start with our downloadable resource “10 Steps to Ensure Sales Tax Doesn’t Burn Down Your eCommerce Business.” It has a section on nexus that I think you will find interesting. You can find it by clicking here - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Thank you so much for the informative video! So I have a question, I will have physical nexus in GA for a shopify print on demand store, so I assume I will need to immediately start collecting sales tax at GA rate, but if sell to someone in a different state (after I have reached the trasaction number of sales level), do I need to collect tax for both GA and the other state? Thanks!
Yes you will need to register and collect in GA immediately. But note that you are only collecting on sales going to GA addresses. When you hit economic nexus in other states, you will collect and remit sales going into those states to those states. So you will never be double taxed. Let us know if that doesn’t make sense.
@@LedgerGurus OK that helps out a lot! So even though I am registered for GA, my sales tax is only for people who are shipping items to GA, so the sales tax collected is only based on the state the customer is in.
So what about when I possibly scale my business to hold in a warehouse in GA, same rules apply? Only collect on those who also live in GA?
@@codywaits4012 yes that’s correct! If you have physical presence in GA, then you have nexus, then you collect sales tax on products shipped to GA customers.
@@LedgerGurus English is my second language and I just want to confirm. I live in California and I just open a shopify store. Does it mean I only need to collect sale tax in CA? I don’t have to collect sale tax for sale going to other states Not untill it reach to certain amount of transactions in those states, right?
Thanks
@@nguyenvy849 yes that’s correct!
🔥🔥🔥🙏🏾🤓
I'm glad you liked it.