Long story short, you should collect tax on the basis of state tax laws depending on which state the goods are purchased from. There are certain rules and regulations you should be aware of before you start charging tax through your dropshipping business.
Shopify doesn’t file or remit your sales taxes for you. You might need to register your business with your local or federal tax authority to handle your sales tax. The calculations and reports that Shopify provides should help make things easier when it’s time to file and pay your taxes.
The calculations and reports that Shopify provides should help make things easier when it’s time to file and pay your taxes. You should always check with a local tax authority or a tax accountant to make sure that you charge your customers the correct sales tax rates, and to make sure you file and remit the taxes correctly.
Do you have to charge sales tax on dropshipping sales?
There are certain rules and regulations you should be aware of before you start charging tax through your dropshipping business. Some states in the USA such as Montana, Oregon, New Hampshire, don’t require sellers to either collect or pay sales tax. The same can’t be said for the majority.
For example, some states expect you to charge on shipping while some don’t. As of June 21st, 2018, all online retailers who have collected $100,000 in sales or had 200 transactions have to pay sales taxes. The threshold can vary depending on the state but this is usually the starting line.
When do online retailers have to pay sales tax?
As of June 21st, 2018, all online retailers who have collected $100,000 in sales or had 200 transactions have to pay sales taxes. The threshold can vary depending on the state but this is usually the starting line. You can check the threshold for your state through online sites and apps.
How to set up a shipping zone on Shopify?
On your dashboard, go to Settings → Shipping. You will find the option to add the shipping zone here. You can give the zone a name, for example, the region the countries fall in and then add all the countries that you ship to. You can set up the automatic calculation of sales tax on Shopify.