Sales Tax Help

Tax is different in any single country, therefore you should inform yourself locally. Plus, if you sell internationally, there is a complete new set of guidelines, laws and general things you need to consider. Its one of the things that many small eCommerce sellers don't care about. They think that as a simple Shopify reseller they are not obligated to these things at all - a MAJOR mistake.

I know people paying their entire profits + a hefty fine because they didn't pay a penny on taxes for like 1-2 years or more. Most of the sellers I know don't even own a legal business.

My advice: especially when it comes to VAT which is different in any country, you should consult a local tax assistant. There are a ton of things to keep in mind so clearify them upfront. Its one of the reasons I tend to stay in my domestic market or at least in the EU.

I can only speak for sites selling to the U.S.. If your business is located in a state, you are required to remit the sales tax that state charges for shipments made to that state (there are 5 states with zero sales tax, so if you are in one of those, there is no sales tax required).

While that explains the basic rule, there are also sales tax nexus considerations. If your supplier has a warehouse in a state whose nexus laws define a non-company-owned dropship warehouse as having created a nexus (California, for instance), you have salespeople traveling to one or more states or even if you attend a convention in a state where you promote your products, you have created a sales tax nexus in those states and are required to remit sales tax when individuals from those states order from you. If you owe tax because of your dropship supplier's warehouse location you'll know because they will charge YOU the sales tax when customers in that same state order from you.

Contrary to the B.S. that certain eCommerce sales tax calculation software companies try to sell you, you DO NOT have to pay sales tax or any other kind of tax in a state that passes a law saying you owe them tax if you do not have a sales tax nexus in that state. States that pass laws telling non-nexus businesses in other states what taxes they need to charge their citizens are just hoping you'll be stupid enough to pay them (or they don't understand federal laws). It violates the Commerce Clause; only Congress can pass laws that govern interstate taxes.