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 You might think a computer program, but one vote can make it outdated.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!
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.
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.
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/
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/
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.
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/
We sell what we make as a hobby on Shopify - we have not hit 200 transactions or 100K in any particular state - do we still collect tax? Our physical location is Georgia. We are not even hitting the threshold for sales in our nexus.
Yes, you do need to register and start collecting in GA since you're based there. Just watch the others to see when you get close to crossing the thresholds. You may also want to strategize on if it makes sense to collect and remit. You may find that if your sales are too low, it might be easier & cheaper to deal with the fees and fines than to go through the remittance process all the time.
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/
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.
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.
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.
When you look for a Sales Tax "Permit" or "Tax ID" for Florida, there is literally 20 options for Sale & Use Tax. I cannot find a single place where it says "Permit" or "Tax ID" so I registered, filed everything out perfectly, and got a certificate saying, "Certificate of Registration" with a Certificate number and "Florida Annual Resale Certificate for Sales Tax" attached. There is no "Tax ID", just my certification number. I am so confused, all I'm missing is a Tax ID number for Shopify...
@@ElizabethAmanna I would use business partner number as your FL sales tax ID, but use “certificate number” to provide resale certificate to your suppliers.
We've got a free download that's been recently updated. You can access it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. The list is at the end in the appendix, but don't just skip to the end. The PDF has some really valuable info in it about sales tax and how to get compliant.
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
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.
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!
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/
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/
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
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.
A good place to start to learn about sales tax is our downloadable 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/
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/
Initially you register in the state your business is set up in. After that, you only register in states AFTER you have nexus there - physical or economic. We just did a webinar this week that explains the whole process. I think it'll answer any questions you have right now. Click here to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
I am a new e-commerce in North Carolina on Shopify. I have a physical address registered with my llc. Rarely am I there and I don’t have inventory packed there. With it being registered that categorized me as a physical nexus? Which means I should register for a state tax id and charge my customers? I just want to be clear. Somebody please point me in the right direction 😥💕
Yep. You're completely right on this. Because you're registered in NC, you do have register for a sales tax ID and charge your customers. If you're fairly new and don't have inventory in any other state yet, you probably don't have to worry about hitting nexus anywhere else yet. Congratulations on your new business!
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?
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.
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...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?
where can I learn about the thresholds at which I need to register? is it a $$ amount or number of sales to a particular state that decides that the registration is needed? TIA
I’d search up your specific states Sales tax threshold. I live in NV and ours is either 200 separate transactions or $100000 in revenue, whichever one comes first!
@@millaezman8984 ah i see your problem now. Yes, search up each state you sell to as thresholds can differ (like 30 of them have the exact same threshold as NV). Most of them have a pretty decent threshold, but some hold you accountable as soon as you make a sale in that state. It sucks, but you’d mostly have to keep track of it on your own or wait till said state audits you and gives you a couple months to fulfill those payments. It’s confusing but id definitely give that link in their description a read, it’s really helpful! They also have a couple of informative recorded live streams on yt too
@@richardmartinez5040 Thank you ! I feel like that information should be somewhere in one place. or even automated. Hard to believe every small online business does this enormous amount of work.
@@millaezman8984 Let me make it easy for you. We've already pulled all that information into one document. It's at the end of our free PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It's been newly updated. Click here to access it - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi there, thank you for this video! My dropshipping eCommerce is based in DE. I sell only on my website, not Amazon or Shopify. My suppliers are charging sales tax from me but I'm not sure if I should charge it back to my customers. Can you please help me understand the sales tax scenario for a drop shipping eCommerce that sells exclusively from its website? Thanks for your time!
Hi! Yes definitely! You can provide resale certificates to your suppliers so they stop charging you tax. You can voluntarily register in those states and start collecting tax or I would increase your price to your customers to cover that cost if you are not able to give them the resale certificates or register in those states.
@@LedgerGurus thank you for your attention! So if I'm not registered to the customer's delivery state, I can not repass to my customer the sales tax the shipper charged me, correct?
That will depend on the states you're selling in. Different states have different rules. Research your own state to see what is required, and remember that even if you don't have economic nexus in other states yet, you DO have physical nexus in your own state. You can even call your state's Dept of Revenue and ask them. Research carefully the rules in the various states you're selling in as you approach economic nexus in them.
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!
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!
What about use tax? Everybody is talking about sales tax but not use tax. I've read but not sure if it is true that you have to charge use tax if you haven't established a nexus in that state. This is so confusing and frustrating to have your own website and now know how to set this up.
No you don’t need to. Use tax is incurred when you purchase something for use that you didn’t pay sales tax for. But for remote sellers, lot of time states require them to register for vendors use tax and require in state sellers to register for sales 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.
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.
If I understand correctly I don't collect the taxes unless I have a considerable amount of $ in a state. For now, I pay for it myself. Is it the same in Canada?
You don't have to remit taxes in a state you don't have nexus in, so that means you shouldn't have to be paying it yourself. If you're that small, and you only have physical presence in the state your business is registered in, you probably don't have nexus anywhere else. That means the only state you need to worry about collecting and remitting in is your home state. And you should be collecting that, not paying it out of your own pocket. That's probably a good bit of your profit margin going down the drain. For more details, I suggest you watch our free masterclass "The Uncomplicated Truth about Sales Tax." You can access it here: ledgergurus.com/resources/sales-tax-masterclass/ We only work with US-based sales tax, so we can't help you with Canadian taxes.
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.
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.
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!
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.
Yes. You register with each state after you hit nexus in that state. You can learn more about it in our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
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 :)
@@LedgerGurus i don’t have nexus in any other countries. but if there’s no threshold does that mean i have nexus and report it even if there’s a sale of like $20?
@@georginasantillan3952 Yes technically, but I don't think that's a practical approach. I think you are safe to wait till your sales are more substantial.
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
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.
if you are doing a print on demand business on your shopify store (where there is no warehousing involved, the product is manufactured in Louisiana only when a customer orders a product) and if i live in CA (where i already have a sales tax permit) do i need to setup sales tax only in CA and LA states and nowhere else? I dont have any sub contractors (single person operation)
@@rakheeharidas7720 right now only CA. When you start selling a lot to pass the threshold in other states, then you have economic nexus in those states and will need to register. But I would just monitor your sales right now.
If I buy products from a distributor based here in California but the items are stored and shipped from a different state...does that mean I have a nexus in that state??
@@juan_81614 Then, you don't have nexus in that state because the inventory isn't coming from your company yet. For more information on nexus, 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/ Also, we are preparing to launch a course on all aspects of sales tax. To learn more or to register to receive updates, go to: ledgergurus.com/resources/sales-tax-course-updates/
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/
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/
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/
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! 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!
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!
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.
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.
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
I started selling as a hobby at mercari stuff that i did not want anymore.But want to move also to etsy to sell handmade products what do I need to have everything legal here in Houston Texas.
Hi Yasmin, since Etsy is considered a marketplace facilitator and Texas has marketplace facilitator laws in place that require Etsy to collect and remit sales tax for its sellers, you don't need to do anything. Yay for marketplace facilitator laws!
I will be a new international seller and selling through Printful. Is Printful also a marketplace facilitator? They are located in North Carolina. Does that mean I wouldn't need to collect sales tax in North Carolina as they have the same law?
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/
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.
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 like your video! But I have a question, if I live in the EU and create a company here, but I sell products online in the US, where do I have to pay the tax?
You will pay sales tax to the states you collect it from. After you pass a state's economic threshold, you have to register to pay sales tax there, and then you collect and remit that sales tax to that state. For more information about sales tax and for a list of economic thresholds by state, 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/
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?
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!
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?
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.
Yes, you only collect and remit sales tax in states that you are registered. You don't want to be collecting sales tax in states where you have not yet registered.
LedgerGurus thank you and one more question if i do have a lot of out of state orders and not collecting taxes on those will i owe at the end of the yr ?
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 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 states. 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.
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/
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!
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. :)
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.
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.
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.
It depends on what you purchase from your suppliers in CA. If you purchase raw ingredients to make your products, then you should pay sales tax. However, if you buy inventory from suppliers in CA to resale to customers in FL, then you don't need to pay sales tax to your CA suppliers and you'll need to provide them with a resale certificate. CA is one of the states that require you to register with CDTFA (CA's DOR) to get a valid resale certificate. If you decide to do that I would register but then call CDTFA to explain to them you are only applying to get a resale certificate and that you don't have a filing obligation and see if they can mark your account to not have sales tax returns filings due.
@@LedgerGurus I will be dropshipping from my suppliers, mostly clothing and collectible items. I will most likely have to pay the sales tax from my orders going into CA. I don't think I will be able to get a resale certificate without registering.
@@usgoodz917Yes, you will have to register with them. Kexin just did a really great video on resale certificates and addresses this issue in it. Watch this, and let us know if you still have questions. - ua-cam.com/video/DlrTfzKoDQU/v-deo.html
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?
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
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.
Hello I am from Turkey never been in USA. As a foreign seller I setup an LLC which has New York address is it considered a nexus for me with new york? I do not have an inventory in new york
@@LedgerGurus I do not have any employee or anything. I bought an adress from a person. He lives there. if IRS send any document he will scan it and send it to me
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, 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! 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.
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.
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!
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?
Short and sweet, fantastic content. Now I'm wondering if what you said is for international sellers who are selling or planning to sell for the USA...(and ship from aboard) - if the answer is yes there are some more or new updates regarding the tax matter to its the most updated "data" on this matter?
Hi! If you are an international seller, you still need to think about nexus (physical and economic). The nexus laws applies to international sellers as well.
@@LedgerGurus hi thanks for your response , I’m wondering if hiring someone on upwork etc is also considered as part of the nexus matter or because it’s on some platform that collect the tax/Vat etc it’s fine and won’t make me have to care this nexus matter ?
In general hiring someone on Upwork or similar platforms would make them a 1099 contractor and not establish nexus. Watch video W2 vs 1099 Employees for details ua-cam.com/video/1D673xjwdhk/v-deo.html
@@yovelshoval5139 it depends on whether that person is “actively creating a market for you”, ie whether they are a marketing role. If they are an admin role, they most likely won’t create nexus for you.
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.
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.
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.
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/
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. :)
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.
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.
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/
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/
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.
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/
We sell what we make as a hobby on Shopify - we have not hit 200 transactions or 100K in any particular state - do we still collect tax? Our physical location is Georgia. We are not even hitting the threshold for sales in our nexus.
Yes, you do need to register and start collecting in GA since you're based there. Just watch the others to see when you get close to crossing the thresholds. You may also want to strategize on if it makes sense to collect and remit. You may find that if your sales are too low, it might be easier & cheaper to deal with the fees and fines than to go through the remittance process all the time.
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*
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.
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.
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.
You have mentioned the Tax is applied to everything physical in FBA or anywhere else, what about digital products like books, are they taxable?
Depends on the state, but Amazon is taking care of the tax part.
When you look for a Sales Tax "Permit" or "Tax ID" for Florida, there is literally 20 options for Sale & Use Tax. I cannot find a single place where it says "Permit" or "Tax ID" so I registered, filed everything out perfectly, and got a certificate saying, "Certificate of Registration" with a Certificate number and "Florida Annual Resale Certificate for Sales Tax" attached. There is no "Tax ID", just my certification number. I am so confused, all I'm missing is a Tax ID number for Shopify...
You should use your “Business Partner Number” for FL.
@@LedgerGurus It says on my official document not to use the Partner number for resale
@@ElizabethAmanna I would use business partner number as your FL sales tax ID, but use “certificate number” to provide resale certificate to your suppliers.
Is there a reliable website that lists the nexus thresholds for each state?
We've got a free download that's been recently updated. You can access it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. The list is at the end in the appendix, but don't just skip to the end. The PDF has some really valuable info in it about sales tax and how to get compliant.
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
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.
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 :)
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/
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/
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.
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.
What if you're located in europe and sell in US with printful how does that work?
A good place to start to learn about sales tax is our downloadable 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/
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/
how about when you sell memberships to international people.
You probably don’t have nexus in international countries and regions yet right? If so you don’t need to charge taxes.
Do you have to register with every single area you want to sell to with an eCommerce site? If so that is crazy! how do you get it all done?
Initially you register in the state your business is set up in. After that, you only register in states AFTER you have nexus there - physical or economic. We just did a webinar this week that explains the whole process. I think it'll answer any questions you have right now. Click here to watch it on-demand - ledgergurus.com/resources/sales-tax-course-updates/
I am a new e-commerce in North Carolina on Shopify. I have a physical address registered with my llc. Rarely am I there and I don’t have inventory packed there. With it being registered that categorized me as a physical nexus? Which means I should register for a state tax id and charge my customers?
I just want to be clear. Somebody please point me in the right direction 😥💕
Yep. You're completely right on this. Because you're registered in NC, you do have register for a sales tax ID and charge your customers. If you're fairly new and don't have inventory in any other state yet, you probably don't have to worry about hitting nexus anywhere else yet. Congratulations on your new business!
@@LedgerGurus thanks so much for the confirmation! Your channel is awesome !
@@baeyani9996 Thank you and you're very welcome!
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.
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.
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...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.
where can I learn about the thresholds at which I need to register? is it a $$ amount or number of sales to a particular state that decides that the registration is needed? TIA
I’d search up your specific states Sales tax threshold. I live in NV and ours is either 200 separate transactions or $100000 in revenue, whichever one comes first!
For each state you sell to?
@@millaezman8984 ah i see your problem now. Yes, search up each state you sell to as thresholds can differ (like 30 of them have the exact same threshold as NV). Most of them have a pretty decent threshold, but some hold you accountable as soon as you make a sale in that state. It sucks, but you’d mostly have to keep track of it on your own or wait till said state audits you and gives you a couple months to fulfill those payments. It’s confusing but id definitely give that link in their description a read, it’s really helpful! They also have a couple of informative recorded live streams on yt too
@@richardmartinez5040 Thank you ! I feel like that information should be somewhere in one place. or even automated. Hard to believe every small online business does this enormous amount of work.
@@millaezman8984 Let me make it easy for you. We've already pulled all that information into one document. It's at the end of our free PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It's been newly updated. Click here to access it - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi there, thank you for this video! My dropshipping eCommerce is based in DE. I sell only on my website, not Amazon or Shopify. My suppliers are charging sales tax from me but I'm not sure if I should charge it back to my customers. Can you please help me understand the sales tax scenario for a drop shipping eCommerce that sells exclusively from its website? Thanks for your time!
Hi! Yes definitely! You can provide resale certificates to your suppliers so they stop charging you tax. You can voluntarily register in those states and start collecting tax or I would increase your price to your customers to cover that cost if you are not able to give them the resale certificates or register in those states.
@@LedgerGurus thank you for your attention! So if I'm not registered to the customer's delivery state, I can not repass to my customer the sales tax the shipper charged me, correct?
how about selling digital goods?
That will depend on the states you're selling in. Different states have different rules. Research your own state to see what is required, and remember that even if you don't have economic nexus in other states yet, you DO have physical nexus in your own state. You can even call your state's Dept of Revenue and ask them. Research carefully the rules in the various states you're selling in as you approach economic nexus in them.
What do Federal Trade Commission say about this issues because they are responsible for interstate commerce
Sales tax isn't a federal issue. It's a state & local issue, so the FTC isn't really involved. Each state has the right to make its own rules.
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!
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: ua-cam.com/video/CV0awU-Qi5Y/v-deo.html
What about use tax? Everybody is talking about sales tax but not use tax. I've read but not sure if it is true that you have to charge use tax if you haven't established a nexus in that state. This is so confusing and frustrating to have your own website and now know how to set this up.
No you don’t need to. Use tax is incurred when you purchase something for use that you didn’t pay sales tax for. But for remote sellers, lot of time states require them to register for vendors use tax and require in state sellers to register for sales 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.
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.
If I understand correctly I don't collect the taxes unless I have a considerable amount of $ in a state. For now, I pay for it myself. Is it the same in Canada?
You don't have to remit taxes in a state you don't have nexus in, so that means you shouldn't have to be paying it yourself. If you're that small, and you only have physical presence in the state your business is registered in, you probably don't have nexus anywhere else. That means the only state you need to worry about collecting and remitting in is your home state. And you should be collecting that, not paying it out of your own pocket. That's probably a good bit of your profit margin going down the drain. For more details, I suggest you watch our free masterclass "The Uncomplicated Truth about Sales Tax." You can access it here: ledgergurus.com/resources/sales-tax-masterclass/
We only work with US-based sales tax, so we can't help you with Canadian taxes.
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.
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!
Do we collect local and city tax aswell online?
Yes! All levels - state, county, city, special district.
Im going to be selling to the entire US. Do i have to register for all 50 states before i start collecting sales tax?
You only need to register in the states where you have nexus (physical and economic). Do you have physical and/or economic nexus in all 50 states?
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!
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.
Do we need to register 50 states individually?
Yes. You register with each state after you hit nexus in that state. You can learn more about it in our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
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 :)
how do international sales factor into all of this? i’m based in the US, do i need to charge tax on that?
It depends on if you have nexus in other countries. UK and the EU don't have any threshold and Canada has a $30,000 threshold.
@@LedgerGurus i don’t have nexus in any other countries. but if there’s no threshold does that mean i have nexus and report it even if there’s a sale of like $20?
@@georginasantillan3952 Yes technically, but I don't think that's a practical approach. I think you are safe to wait till your sales are more substantial.
@@LedgerGurus okay thank you!
Hello I have an auction house in Iowa. But sell online as well. Im registered in Iowa only. My accountant does not know how to structure it. Do i collect sales tax from everyone out of state and just pay it to Iowa? or do I only collect from Iowa Residents? Or Do I have to register in all 50 states? This seems way to complicated. 😔
Hi! We are here to help! You don't need to collect in other states until you pass their economic nexus threshold. If you have more detailed questions, feel free to schedule a consulting call with us here so we can help you! calendly.com/ledgergurus-sales-tax
Kansas threshold is 0.01$, so do we have to register as soon as you get your first order from Kansas?
Yep. As of right now, you do.
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.
if you are doing a print on demand business on your shopify store (where there is no warehousing involved, the product is manufactured in Louisiana only when a customer orders a product) and if i live in CA (where i already have a sales tax permit) do i need to setup sales tax only in CA and LA states and nowhere else? I dont have any sub contractors (single person operation)
You only need to register in CA. The dropshipper doesn’t create nexus for you :)
@@LedgerGurus so do I even need to collect sales tax anywhere else other than CA on my Shopify store?
@@rakheeharidas7720 right now only CA. When you start selling a lot to pass the threshold in other states, then you have economic nexus in those states and will need to register. But I would just monitor your sales right now.
@@LedgerGurus thank you I really appreciate your feedback on this..once I start hitting big sales I'm coming to you to handle my taxes 😀
@@rakheeharidas7720 sounds great! Hope your business is so successful that you hit nexus threshold in all the states :)
If I buy products from a distributor based here in California but the items are stored and shipped from a different state...does that mean I have a nexus in that state??
Are you dropshipping, or are you receiving these items before you sell them?
@@LedgerGurus I am receiving the items then I prepare the shipments out to customers
@@juan_81614 Then, you don't have nexus in that state because the inventory isn't coming from your company yet. For more information on nexus, 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/
Also, we are preparing to launch a course on all aspects of sales tax. To learn more or to register to receive updates, go to: ledgergurus.com/resources/sales-tax-course-updates/
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/
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/
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/
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.
Very informative video! This is always a very technical and often misunderstood area of business. Great content.
Thanks for the feedback!
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!
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.
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.
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.
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
I started selling as a hobby at mercari stuff that i did not want anymore.But want to move also to etsy to sell handmade products what do I need to have everything legal here in Houston Texas.
Hi Yasmin, since Etsy is considered a marketplace facilitator and Texas has marketplace facilitator laws in place that require Etsy to collect and remit sales tax for its sellers, you don't need to do anything. Yay for marketplace facilitator laws!
I will be a new international seller and selling through Printful. Is Printful also a marketplace facilitator? They are located in North Carolina. Does that mean I wouldn't need to collect sales tax in North Carolina as they have the same law?
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/
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.
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 like your video! But I have a question, if I live in the EU and create a company here, but I sell products online in the US, where do I have to pay the tax?
You will pay sales tax to the states you collect it from. After you pass a state's economic threshold, you have to register to pay sales tax there, and then you collect and remit that sales tax to that state. For more information about sales tax and for a list of economic thresholds by state, 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/
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 :)
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?
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.
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.
So i have a question, if i am registered in Oklahoma sales taxes do i only collect taxes in Oklahoma ?
Yes, you only collect and remit sales tax in states that you are registered. You don't want to be collecting sales tax in states where you have not yet registered.
LedgerGurus thank you and one more question if i do have a lot of out of state orders and not collecting taxes on those will i owe at the end of the yr ?
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 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 states. 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.
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/
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!
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. :)
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.
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.
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.
I have suppliers in CA but I am located in FL and so I collect sales tax only in FL, so do I need to get a CA resale certificate?
It depends on what you purchase from your suppliers in CA. If you purchase raw ingredients to make your products, then you should pay sales tax. However, if you buy inventory from suppliers in CA to resale to customers in FL, then you don't need to pay sales tax to your CA suppliers and you'll need to provide them with a resale certificate.
CA is one of the states that require you to register with CDTFA (CA's DOR) to get a valid resale certificate. If you decide to do that I would register but then call CDTFA to explain to them you are only applying to get a resale certificate and that you don't have a filing obligation and see if they can mark your account to not have sales tax returns filings due.
@@LedgerGurus I will be dropshipping from my suppliers, mostly clothing and collectible items. I will most likely have to pay the sales tax from my orders going into CA. I don't think I will be able to get a resale certificate without registering.
@@usgoodz917Yes, you will have to register with them. Kexin just did a really great video on resale certificates and addresses this issue in it. Watch this, and let us know if you still have questions. - ua-cam.com/video/DlrTfzKoDQU/v-deo.html
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.
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
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.
Hello I am from Turkey never been in USA. As a foreign seller I setup an LLC which has New York address is it considered a nexus for me with new york? I do not have an inventory in new york
Hi! If your LLC is registered with New York State then yes you are considered having physical presence in New York.
@@LedgerGurus LLC is registered in Delaware, my business adress is in New York. In that case, do I have a nexus in Newyork or Delaware
@@pinkboyhandmadejewelry3524 why is your mailing address in New York? Do you have an employee or owner there?
@@LedgerGurus I do not have any employee or anything. I bought an adress from a person. He lives there. if IRS send any document he will scan it and send it to me
@@mehmetsaracoglu4601 okay then I think you are okay to not register in New York. And Delaware doesn’t have sales tax, so you are good there too!
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, 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! 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.
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.
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!
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.
Short and sweet, fantastic content. Now I'm wondering if what you said is for international sellers who are selling or planning to sell for the USA...(and ship from aboard) - if the answer is yes there are some more or new updates regarding the tax matter to its the most updated "data" on this matter?
Hi! If you are an international seller, you still need to think about nexus (physical and economic). The nexus laws applies to international sellers as well.
@@LedgerGurus hi thanks for your response , I’m wondering if hiring someone on upwork etc is also considered as part of the nexus matter or because it’s on some platform that collect the tax/Vat etc it’s fine and won’t make me have to care this nexus matter ?
In general hiring someone on Upwork or similar platforms would make them a 1099 contractor and not establish nexus. Watch video W2 vs 1099 Employees for details
ua-cam.com/video/1D673xjwdhk/v-deo.html
@@LedgerGurusThanks, appreciate!
@@yovelshoval5139 it depends on whether that person is “actively creating a market for you”, ie whether they are a marketing role. If they are an admin role, they most likely won’t create nexus for you.
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.
What can you do if you collected sales tax but don’t have a permit?
Refund the tax to customers or register with the state using a historic date to remit the tax collected.
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.
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.
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.
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 🤔🤔