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do you need to charge sales tax when dropshipping

Published on: February 2 2023 by pipiads

Everything You Need to Know About Sales Tax for Dropshipping

hi, this is christine from ledger crews. i hope you're all doing well. do you use a drop shipper in your business, or are you a drop shipper and wondering about what to do with sales tax where you have nexus and where you should collect resale certificates so you don't have to pay taxes on part of your transactions? um, if you have any of those questions, you should watch till the end of the video because i'm gonna answer all of them, but before i dive into the content, if you haven't, please subscribe to our channel and hit the bell button so every time we publish a new video, you will get notified. [Music]. here at leger gurus, we have mostly ecommerce clients and some of them use drop shippers and some- some of them are dropshippers themselves. so we see this a lot and we advise them on what to do with sales tax. so i'm really excited to share this knowledge with you today, and i'm gonna use a whiteboard because for some people it's hard to understand, and it took me a while to understand this as well, so i want to draw it out and make it a very easy, understandable scenario, uh, for you. so you understand the sales tax complicates okay. so the first question is: let's tok about these three parties that are involved in a drop shipping scenario. the first one is the customer. so the customer places an order to the seller. the seller doesn't hold inventory. they use a drop shipper, so they, in turn, order the products from a dropshipper. the dropshipper will actually deliver the product to the customer. so, from the customers perspective, they only deal with the seller. the seller has to deal with both the customers and the drop shipper, because they essentially place an order from the drop shipper and then the drop shipper delivers the product to the consumer. the customer has no idea about the drop shipper. they simply go to the seller's website, places an order and then they get a product delivered from another party. so let me give you an example. so i shop online a lot and i buy a lot of clothing. so, um, one boutique store that i shop with they are using a drop shipper. so the clothing store i shop with is located in california. so the seller is located in california and me, as the consumer, i'm in utah. i places an order on the seller's website, they send me an invoice, i pay the invoice and they turn around and place an order with their dropshipper. that's actually located in utah as well, and the dropshipper will send the seller invoice and have them pay the invoice and then they deliver the product to me from utah to utah. so when i get my packages sometimes i'm wondering: i thought i was shopping with a california company, but how come my package is saying that it's delivered from linden, utah instead of you know somewhere in southern california? and then i realized they're using a drop shipper. and this happens a lot more than normal customers knows. but drop shipping is very popular and it involves three parties. and the customer deals with the seller, the seller deals with both the drop shipper and the customer, and the drop shipper delivers the product to the customer and sends the seller an invoice. okay, so now we got all those three parties straightened out. so there essentially is two transactions, right. so the first transaction when it comes to sales, so the first transaction is between customer and the seller. so that's the first transaction, and the second transaction is between the seller and the drop shipper, because the seller is essentially buying the product from the drop shipper and then the delivery happens, which is the third step, is between the drop shipper to the customer. so now let's tok about where these three parties have nexus. so we'll start with the simple one: customers. they pay sales tax, so we're not worrying about them collecting sales tax, so we're not going to worry about customers nexus. we're going to tok about sellers nexus. so if you are an online seller that use a dropshipper to deliver products to your customers, you will have nexus in first of all, your home state, where you have physical presence. so this would be where your home state is. and secondly, you need to worry about economic next. so where you have physical presence is going to be your home state and any of your employees, whichever state they reside in. and the second one is economic nexus, and this economic nexus is solely created by your customers. so do not worry about where your drop shippers have nexus, only worry about where your customers are creating economic nexus for you. meaning, if you have a lot of customers that are placing orders in various states over the economic nexus threshold- um, like over the 200 transactions or a hundred thousand dollars threshold- then those customers create nexus for you. let's go back to my example. i'm going to write down the example here to mirror what we toked about. we'll just tok about my experience with drop shipping. so the seller is in california, so obviously she will have physical presence in california where she has economic nexus determined by the customers. so i'm in utah. but if she doesn't sell enough to utah, that passes the economic nexus threshold from utah. so utah is 200 transactions or a hundred thousand dollar value. so if she only sells- let's say she only sells to me, i'm her only utah customer- then she doesn't have nexus in utah because she doesn't pass the economic nexus threshold. then she shouldn't charge utah tax. so she shouldn't charge me tax when i place this in order because par as the seller, does not have nexus in this state. so then let's tok about the second transaction between the drop shipper and the seller. in this scenario it's almost like the drop shipper is the seller to the seller, because the seller will send the order to the drop shipper and the drop shipper will send the seller invoice. so when the dropshipper is sending the invoice to the seller they will charge sales tax and where they have nexus. so where does the dropshipper have nexus? first of all, the dropshipper will have nexus where they have physical presence, so wherever their warehouse is located. if they use a company-owned vehicle instead of a common carrier to deliver products, that will incur physical presence as well. so they have nexus in where they have physical presence first and second they have nexus in where they have economic nexus. and this is a big issue because dropshippers like printful- they deliver so many products to all kinds of business owners- one dropshipper can have multiple sellers and if they aggregate their sales to all the sellers and allocate it based on where the customers are, where they're delivering to, they might have economic nexus in so many different states. and this is why most of the time drop shippers will charge seller sales tax on this invoice, because the drop shipper either have physical presence or have economic nexus in where they're delivering to and because so many dropshippers delivered to all over the country for so many sellers on the aggregate level, the drop shipper have passed economic nexus in those states. let me know if that's confusing and i'm happy to explain more in the comments, but what we see most of the time is seller only have physical presence in their home state, have economic nexus when they sell a lot into other states. dropshipper they have physical presence either through where they have stores, warehouses, employees or through their delivery. if they use a company owned delivery vehicle into other states, that's considered physical presence, or if they deliver a lot of products for different sellers and then, on an aggregate level, they pass economic nexus threshold and they will have to charge tax on their invoice to the seller. okay, let me know if you have questions. i know this is not the easiest concept to grasp and it really took me a while to understand all of it too. so, um, after we understand these different things that would trigger nexus for the seller and for the drop shipper, let's tok about sales tax. so when the seller sends an invoice to the cus,

MAJOR UPDATE: How to Pay Tax When Dropshipping (How to Pay Sales Tax with Shopify)

Question one: what taxes do I need to pay when dropshipping? When dropshipping, there are two main types of taxes that you need to pay. The first is income tax and the second is potentially sales tax. Income tax is the easiest, so let's start with that first. How do dropshippers pay income tax? Income tax- for those of you that don't know- it's a tax that you pay on the profit that your store makes for the year. That profit is your income. The same goes if you have a job. If you had a job, then you will be paying income tax on your wages, and with dropshipping, we pay income tax on the profit of our store. So if you don't make a profit, then you don't pay any income tax. In fact, you can often claim your losses as a tax credit. One of the most common tax questions that we get asked here on this channel is this: if I live outside the United States- maybe I live in Australia, but my customers are based in the USA- Who do I pay my taxes to? Do I pay my income taxes to the USA government or do I pay them to the Australian government? The answer is that you pay to your government. so if you live in Australia, it doesn't matter if your customers are in the USA. you pay your income tax to the Australian government. You may also live in a country like the USA where you not only have to pay income tax to the federal government, but you also have to pay it to your local state as well. If you live in a country like that, then, yes, you are obligated to pay income tax to both the government and to the state. Of course, you can live in a country like New Zealand where we don't have states and you don't need to worry about that. Ad, please, please, please, do not ask me what your local income tax laws are. I get asked questions like: "Sarah, what are my tax obligations if I live in Iceland". Honestly though, I don't know, because I live in New Zealand, I don't live in Iceland. I don't know every country's income tax laws. so, please, please, please, do your own research here. So that's your income tax obligations. Let's move on to the trickier issue, which is sales tax. Question two: what is sales tax and do I need to pay it? For those of you that don't know, our sales tax is when a governing body places a tax on goods or services sold within their jurisdiction. In New Zealand, it's our federal government that does this, and our sales tax is called GSTE. The New Zealand government requires us to collect and pay it to them. In the United States, though, it's different. It's not the federal government- ie the one that Donald Trump is the president of- that manages sales tax. Instead, in the USA, it is individual states that do this. Each state can sit their own tax rate and they can also, within reason, set their own tax laws, And there are some states in the USA that thus sales tax havens. No one is required to collect and pay sales tax within them. Yay, But of course, if you may have suspected, the majority of states in the USA are sadly not sales tax havens. Now here's where things have changed from my previous video. In the USA, there used to be a law that required you to have to have something called nexus with an estate before you were required to collect and pay sales tax to it. Nexus, for those of you that don't know, is a legal term. it means that you have a sufficiently large physical presence within a state to be required to collect and pay sales tax to it. To better explain nexus, let's use an example. Let's say that you are a citizen of the United States and you live in Arizona. Well, you have a house in Arizona, You live in Arizona. that's a pretty big physical presence, right? Well, that means that you have nexus within it. and so because you've got nexus in it, it means that you are required to collect and pay sales tax. In the past, you only had to pay tax to states that you had nexus in. So, let's say, a customer comes to your store who also lives in Arizona, and they buy a mug for $15.. Well, you are required to charge and collect sales tax on that order because you have nexus in Arizona. Your sales tax rate is 5.6%. So in this case, here, the text to collect is 84 cents. You are required to pay this 84 cents to the state of Arizona when tax time comes around. But in the past, let's say that you got a second order and this time your customer had come from Texas. Well, you didn't live in Texas, You owned no property in Texas. In fact, you had nothing to do with the state of Texas. Because of this, you had no physical presence in Texas and thus you didn't have nexus in it. The sales tax rate for Texas is 8.25%, but because you didn't have nexus in it, you didn't need to collect and pay any sales tax on that order. This meant then that if you didn't live in the USA- maybe you lived in the UK- that you usually had no nexus in any state, so you usually weren't required to collect or pay any sales tax at all for USA customers, which was a really nice bonus. This law was set in 1992 after a different Supreme Court case, Quill Corp versus North Dakota. It was ruled that nexus was required to collect and pay sales tax, but that law was recently abolished by the new Supreme Court ruling on June 21st. Here's what happened In 2016,. South Dakota passed a Kill Quill bill In. it required out of state vendors, regardless of nexus, to collect and pay sales tax if they were making over $100,000 a year in sales or doing more than 200 transactions in the state of South Dakota. Well, the online furniture retailer Wayfair was not happy with this new law and they took South Dakota to court over it and, of course, they lost. In a five to four decision, the Supreme Court ruled that the previous 1992 ruling was out of date with the current age of the Internet and said that South Dakota was allowed to pass their bill. Question three. does this now mean that I have to collect and pay sales tax within all the states in the USA? No, no, no, It doesn't. The South Dakota versus Wayfair ruling sets two very important precedents. Firstly, yes, it does set the precedent that states are now allowed to pass your own bill that will require out of state vendors to have to collect and pay sales tax. However, it is important to note that until states have passed legislature, the old rule still applies, and most states have yet to actually do this. So, yes, that is one precedent, But it sets another. The South Dakota versus Wayfair ruling was affirmed by the Supreme Court, but that bill was aimed only at large online retailers. Again, to be eligible under this new law, you've either have to be doing over 100,000 dollars a year in sales and South Dakota or be doing over 200 transactions. When other states passed their own laws, they will need to be aimed at large online retailers as well to meet this precedent. If they want to expand that to include everyone, a new court case will be required. So here's the thing: If you are new to dropshipping, then you are not required to collect and pay sales tax within any state that you don't have nexus in, so don't worry about it. Once you get to the stage of this law impacting you, you will be making more than enough money to hire an accountant to manage all of this for you, and the chances are even after all the states have passed their own version of this bill. you're probably only going to be collecting and paying sales tax to a small percentage of the states anyway, Most likely the larger ones like New York. So let's calm down and figure out how most of you should be collecting sales tax by asking yourself one important question Question: do I have nexus in any state in the USA? For most people, the only way that they're gonna have nexus in a state, as if they live in it or if they own property in it. There are some more obscure ways that you can have it, so if you suspect that you might be under these clauses, you should be sure to to seek an accountant, And if you live outside the United States and you don't have nexus in any state, then simply don't worry. ab.

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How To Charge Taxes On Your Shopify Store | Easy Method

how do you charge sales tax on your shopify store, how do you pay your sales tax and all that stiky stuff coming up in today's video? hello, hello and welcome back to the channel. if you're new here and we don't know each other, you've never met me. my name is carrie, i'm the founder of shirt school and i created this channel to bring you the best strategy, secrets and hacks to grow your online t-shirt apparel or print-on-demand business, and in today's video, we're once again toking about my favorite thing in the world: taxes. if you're anything like me, taxes just give you a headache and they're just constantly frustrating and it just feels like i'm always paying taxes, so taxes really stink. but luckily, today we're going to specifically be toking about sales tax on your shopify store and i'm going to show you the easiest way that i've found to collect it and actually pay it to your state and how that all works. this is a question i get all the time like gotta be. one of the most asked questions is about sales tax and how to collect it, when to collect it and how to pay it- all that kind of stuff. so hopefully today i can bring some clarity to this question and help you out. the first thing i want you to know about sales tax is that you only pay sales tax on sales that you make inside your state. okay, that's one of the beauties that we have being an online business is that we don't just sell in our state, locally. we sell all over our country and maybe all over the world, and we don't have to pay sales tax on any sales outside of our state of residence. they call this sales tax nucleus, and so you have to pay taxes in any state in the united states where you have nucleus. now that basically means you just have to have like an office or some kind of residence there, right? so for most online businesses, especially small businesses, you're only going to have that nucleus in one state. wherever your business is located, even if you're running from your home, you're going to have to have a physical address, and so most likely for most of you, that's going to be inside your state only. to use amazon as an example, amazon has fulfillment centers and offices all around the united states, so amazon has to charge taxes in most states in the united states. that's why, even though amazon might be based in a certain place, they have, since they have facilities all over the us. they have to pay sales taxes on all the sales in those states, but luckily, since we have a small online business, you most likely only have that one location and so you're only going to pay sales tax on the sales that you make inside your state of residence. okay, the last thing i want to say- and then we'll get into the tutorial on actually how to set this all up in shopify- is that i've said it a lot and it's another question i get that's very related, and i recommend that you don't get your llc or your business licenses before you actually have some sales under your belt. right? i recommend that you get started on shopify without doing all of the the llc's and business licenses and sales tax permits. go ahead and get a few sales under your belt before you actually get your business license and you start paying your sales taxes. you want to make sure this is something that you want to continue with. so a lot of people really stress out when they're first starting and luckily you don't need to stress because you can actually claim: you know, put your under your social security number on your taxes. you can put your sales under there. you don't have to worry too much about sales tax when you're just starting out. but once you have some sales and you know that this is going to be something long-term for you and that you're going to stik with, you want to make sure you do get your llc, get your business license, get your sales tax permit and you start paying that sales tax each month. if you are just starting out, you're brand new and you're watching this video and you're like: i don't have my business license. okay, i recommend that you go ahead and set up sales tax in your shopify account so that you are collecting it. but go ahead and just set it aside. hold on to it, just in case you need to pay those sales taxes later. that's what i recommend. you don't necessarily have to do that, but even if you don't have your business license, i would just turn it on, collect it, put it aside, maybe in a separate account, so that you're not tempted to spend it, and just so you have it there in case you need to come back and pay those sales taxes. hey, if you're getting value out of this video, smash that like button and also make sure you subscribe to the channel and hit that bell icon. when you subscribe and hit the bell. you're gonna get notified each week when we put out videos. now, as much as i hate toking about taxes, i know you love hearing about it, so i plan to put out more videos related to this kind of content. so if you want to see that, make sure you subscribe back to the video. okay, jumping into shopify inside of uh test account that i have here. i want to let you know setting up sales tax in shopify is actually a very simple process. a lot of people get really scared of how to do this, and it's- it's actually pretty simple. so all that you want to do is go to your settings here and you're going to want to go to taxes right there, right, and so we have, uh, some different options here. you're welcome to look through these and see if you you want to use any of those options. what we're going to want to do here in the united states, we're going to want to go right here and hit setup. okay. now the great thing about shopify is, once you set this up, it's going to automatikally calculate all the sales tax for all the counties in your state and it's just going to do all the hard work for you. so you're going to hit this collect sales tax button and you're going to select your state of residence- and i will select oklahoma, right here- and then we're going to simply hit collect sales tax. okay, you don't have to put in your uh, your actual sales tax id. you can go ahead and start collecting it without that and put that in later, as you saw me do there. so after you've done that, that's it. that's all you have to do in shopify. so after this first step, your customer is going to have to pay the additional sales tax on any purchases that they make if they are inside of your state. this is not a big deal. if somebody, if you go down to the convenience store, you buy something, you're going to expect to pay sales tax. so here in oklahoma, for instance, if i have somebody joe down the street that buys something from my store and he's in oklahoma and i'm in oklahoma, he's going to expect to, say, pay sales tax. so once you've set this up, your store is already collecting sales tax. you don't have to do anything else on your shopify store to actually collect the money. i do want to make sure you understand that shopify will not pay your sales taxes for you. they are simply going to collect it from the customer and give it to you and it's just going to get lumped in with the revenue that you're making and you're collecting from your sales. so you're going to have to actually put it aside and not spend it, so that you have the money there to pay your sales tax. step number two: you're going to want to find where you pay sales taxes inside of your state. now, keep in mind: you only want to do this if you already have your llc, your business license and your sales tax permit. okay, you have to have that before you can do this. so make sure you get your business license, get your sales tax permit. then you're going to want to find where you pay taxes. okay, here in oklahoma, it's okay, tap. this is the website i know most of you guys aren't watching from oklahoma, but just to give you an idea of what this looks like. now, here in oklahoma, we have to remit our sales tax every single month by the 20th of the month for the previous month. so all you're going to want to do here is simply get your- uh, your account set up with whatever, whatever website for your st.

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How to do Taxes in Dropshipping- Complete Guide for 2022

all right. so in this video we're going to tok about how to do taxes with drop shipping. okay, it's a really big topic and it's really important to understand that. it's actually very important to understand this topic only after you start making sales. so if you're just starting out, if you have absolutely no idea about drop shipping, if you never have ran a store yet, don't think about that at all. okay, there's people who figured it out already. so it's possible to do it properly and you shouldn't worry about. all right, this is not going to work out for me and i have to know all the legal things before i even get started. if you haven't gotten started yet, then, number one, this video is not for you. and number two, don't worry about all the tik stuff. okay, at some point after you start making sales, you should actually start worrying about it, because it's actually pretty important to the property. so here we're going to tok about how to do it properly and what to what to focus on. all right, so the very first thing i have to mention is i am not a legal accountant, so i cannot officially advise you to do anything, so this video is going to be only based on my experience. don't take this video as a legal foundation. you should get a accountant or a person who knows what they're doing, all right. so the number one thing for taxes is: it's going to be pretty easy to to do all the tax statements and to do everything properly. if you have collected all the receipts, if you have done everything properly, if you know how much profit you made, how much loss you made, how many fees you paid, how many refunds you had, all those little things will be important and they're gonna screw everything up for you if you don't do it on a consistent basis. everything which goes into accounting is important to understand. that you should not do it in the very end and, with and like with everything, you should constantly do it as a process, okay, and at some point after you start making decent money, you can have a person who's going to calculate the things for you, and it's going to make things much easier for you, okay. so, number one: do everything properly. understand how much expenses you had, how much profits you made. all of that is going to be crucial to make it proper. and also, every single expense has to have a receipt, okay, and this is a thing which i've learned the hard way. in the beginning. i didn't collect any receipts, i didn't do anything. and what is really important to do and what's also pretty easy to do: every time you pay something, it doesn't matter if it's facebook, it doesn't matter if it's your supplier, it doesn't matter if it's a shopify app or shopify subscription- just have a folder where everything is going to be in one place and you do understand where the receipts are okay, and then, if that's already going to be ready, you're just going to give it to the accountant and everything is going to be done so much easier. the other thing is you need to have an invoice for every single person who bought from you. okay, so there's tons of softwares. in germany, we use sevdesk and it's basically a shopify app which makes invoices for every single customer which bought from you. okay, so it's going to be automatik. you don't have to do it manually and it's pretty simple to use, to set up. however, you do need to have it because if people from the government or the people who get your taxes, um, will want those, those invoices, they will need them for sure. all right, so you, officially, are obligated to have them at some point if somebody asks whenever, at a random time, that can actually happen like three years down the line, and they want receipts for 2019, okay, and then you're going to be in big trouble if you don't have that nice organized folder and yeah, that's basically important. also, two very specific things i want to tok about here is number one: get one supplier, and it's going to be so much easier if you only work with one supplier. i added this crucial mistake to keep working with aliexpress and with like a bunch of different suppliers for the first like three months of me doing well in dropshipping- okay, and that was a huge problem later on in accounting, because aliexpress is a pain in the ass for accounting and it's going to be a really, really annoying process. if you had like 20 000 orders, all right, so it's going to be a big, big problem. if you do not like real numbers on aliexpress. it's going to be annoying. so what you should have instead is one agent which is going to be an all-arounder. that person is going to have all the products you're selling and he's basically going to be the supplier which you go for always, okay, and later on you have maybe one more warehouse which you also pay, and that's it, but it's important to have this overview and not have 10 different suppliers, because it's going to be so annoying. and i had this huge issue and it took me like a month or so- and we were basically three people which were full-time working on this- to me- to work it out and do it properly, because it was just such a mess because i didn't care about anything. i didn't do anything properly and after that i felt it. so now i know it should actually be done in the in the first place and you shouldn't wait for it so long. however, keep in mind that accounting feels very productive, but in reality, it's not productive at all from a money making perspective. okay, so you're not going to make more money through accounting. however, it's just going to make your life easier in the long term and also it's going to help you not lose a lot of time at one point, because at that point you're not going to be able to make any money if you don't have any time investments at all for anything else than this accounting thing. okay, so keep this in mind: that accounting is important. you should do it one by one. however, do it only in your free time. after all, the really important things are done, okay. so all the money making activities should be always a priority, no matter what it is. and after that, after all of this is done, the next thing: in your free time, you should actually focus on the accounting. and if you do 30 minutes per week of accounting, you're probably going to be good, all right. it's like 30 minutes per week, one hour per week max, and it's gonna be off all right. however, if you don't do that for like four or five months, it's gonna be a really big problem, and i cannot emphasize this enough because it was such a huge issue for me personally and i had a really, really bad experience with that in a way like it's. it was just insane, okay. and also, if you hire freelancers, you need to understand that those freelancers- if you don't hire them through upwork or through a platform where it's super easy to get the, the receipts and the invoices, then it's going to be also a problem. if you just privately hire a person, they have no idea how to do anything and you don't really ask them for receipts and for invoices, they're not going to give them to you. and the same thing goes for the suppliers: if you don't ask the supplier for a receipt and an invoice. they're not gonna give it to you, okay. they're not gonna actively go to you and send you everything. you need to go to them and ask them: hey, every time you send this, please give me this as well. and if they don't, you have to constantly remind them, put it in folder, etc. and the last thing i want to mention here is facebook ads. so there are scenarios where you lose access to a facebook account and then all the receipts are gone. okay, so that can be a real issue. and if you have some kind of really strong block on that facebook account, you're not going to be able to access any receipts and any invoices and any anything basically at all. okay. so it's really important to keep that in mind and constantly download those receipts- obviously don't be paranoid about it- and do it every day. you basically have to have a report with all the things which facebook- uh, you paid facebook- and you have to have those receipts in a separate folder. it's super simple to g.

Do You Charge GST/VAT/TAX When Shopify Dropshipping?

tax in general, like sort of, if you're from Europe it'll be that if you're from America there'll be a different sort of tax to customers. so this is a pretty interesting question. so what I usually do is I usually just don't charge any tax because I want to keep the conversion High. because when you pay or charge something for ten dollars and by the time they get to check out it costs 11 because of the actual one dollar, two dollars in tax. then they're sort of gonna open down and check up. I'd rather have an increased conversion around them, not abandon me. yeah, getting that ten dollars and giving you know one out of the ten dollars to the government and I'll only get nine dollars. in the case there is an option through Shopify we can go ahead and charge all the taxes to every single location to the customer. so it'll also be very Dynamic. so if it's sort of a customer from United States and they're from California, it'll automatikally charge them that X percent in tax for Californians. so that would go on top of the price. so that means whatever you sell, you can get how much you listed the price for. you wouldn't be having to eat out of your profits or your Revenue in order to cover the tax payments. if you're doing Drop Shipping, I'd recommend you just eating up the tax, you know, increase your price by two or three dollars to take it in. count the tax for all countries worldwide. but if you have your own e-commerce spray on your hand, you have your own products in-house. that's where you want to go ahead. maybe charge taxider because now you've got slim profit margins. now you're sort of dealing with your own products because you've paid for everything up front, you've paid for marketing, paid for this and that you can't sort of. if you lose 10, that's a lot. so you might want to charge your GST to the customer if it's your very own custom product. but when doing Drop Shipping, I think don't worry about tax, just sort of. when you make a lot of money, when you sort of do 100K, automatikally X percent and go towards GC plus, if you're in Australia and you're doing Drop Shipping, if you're doing correctly, you should only get like 10 to 15 percent of your customers from Australia. oh what, they don't pay 10 on those small percentage of Australian sales and on top of that, if you're doing it correctly, you're doing Drop Shipping Australia. a hundred percent of your marketing and expenses. you can get GST refund so you can get the money back. so you actually would be paid money back from the government because you should be spending more Australian expenses than Australian revenue. for example, let's say you spent twenty thousand dollars on Facebook ads. you don't get refunded two thousand dollars in GST. now let's say, out of the 20 000 you've made a hundred thousand dollars in Revenue, but out of the hundred thousand, only ten thousand came from Australia and out of that ten thousand you're only to pay one thousand dollars in GST. so see how you're sort of getting two thousand dollars refunded and just saying you're paying to 1 000 so you can make a thousand dollars just off GST refunds. I don't know if that made sense. it sort of might be confusing, might be complicated. just, I've done this for some time, but hopefully that answers about Tommy. but if you're interested in, I am offering one-on-one coaching. the steps will be: one: you definitely have to check out all the reviews on my website, signcom reviews. you can also find them on YouTubers, YouTube and in my reviews. and then to your net: check out my YouTube and Instagram to see my results, see if sort of you'd want to work with me and see if you know I'm the type of Personality that you want to work with and if you've done one and two, are you still interested and you really want to work with me and my team? one-on-one message me on Instagram or email me being like: hey, I'm interested in the one-on-one coaching and I can definitely jump on a call here to see if I could help you out and feel right fit. but yeah, let me know if that is something you might be interested in and then we can jump on a free sort of consult for after you've done one and two. but that answers your questions on the face.

Paying TAXES as A Dropshipper

[Music]. how do I pay taxes for dropshipping? now, before getting all this stuff, guys, I'm not a CPA. you want actual professional advice. go find an accountant you know near you- family accountant, whatever you know. you can listen to what I'm saying, but don't take it as professional advice because I'm not an accountant. in one day I'm having to pay tax- on Monday, April the 15th, you know one thing is sort of dread, but there's two things that are guaranteed in life when were born, which is taxes worn and death. number two. so you know you just have to go through it. but I wish I learned about taxes and you know business formations and things of that nature way earlier on. and for just answer quick, a lot of people ask me: should I start an LLC corporation desk or you know what should I do? don't worry about that stuff until you have some momentum. I would tell you this: for any business you know, to start a dropshipping store, you can just start, you know, as a sole proprietor with your social security number and just do that instead of having to worry about an LLC and all this stuff, because you know why, go through all the trouble and money to start all these formations and then you know you don't like drop shipping or you don't, you're not really into business. you just wasted that time and money when you don't necessarily need it for here in the United States you have to pay tax based off of your profit. so let's say, if I have a drop shipping store that did a hundred thousand dollars in revenue and I had 30,000 in costs, including add spin product fees, whatever- and then I'm left with $70,000 profit. so then I'm gonna have to pay federal income tax and maybe state income tax, depending on where you live, maybe even county, depending again where you live- on that seventy thousand dollars. so I don't pay on the whole hundred thousand dollars I pay. I'm not seventy thousand dollars. and now when you're doing this stuff, you can expense other things. you know meetings, travel, you know as long as it's for business, and you keep all the receipts and things like that. now that's what I want to tok to you guys about. it's just my accountants office a couple of days ago for a couple of hours going over all my taxes for this year, things like that, and I did not have everything that I needed. you know you do not want to get audited. you know when you get audited. basically the the government looks at your taxes. I say, uh, we want to know more about this. and then people- by the way, you can't just get audited, it's not just like they do it only on your current taxes. they can go five years back and say, oh, we want to see more about you know $50,000 on travel five years ago, on how all those are business expenses and how you expense a private jet and all this stuff. so you do not want to get audited by the government because they're gonna come to you in person, by the way, maybe expected, maybe unexpected, and they're gonna be asking you a lot of questions. and so we want to minimize our risk of getting audited as much as possible. and the way to do that is to keep track of everything, because the government wants to see proof of you know doing different things and paying for these different expenses. because if you're not paying, like sometimes- let's say, for example, you know you have a hundred thousand dollars in revenue on a job shipping store and you spend a hundred thousand dollars in expenses, then you're not gonna have to pay any tax on that hundred thousand dollars because you know it's not profitable. now, of course, this depends on where you live. like I said, I'm not a CPA but you're paying money on your profit. now, as far as sales tax goes, I've never actually paid sales tax or charge sales tax from my dropshipping stores and the reason for that is because I don't actually have inventory. I have four stores that I do in-house, but for things that I'm shipping directly from China, you know I'm not paying that, that sales tax or charging sales tax, because tiknically I'm not the actual person or manufacturers sending it out. you know the suppliers sort of help you out with that. you know you're paying them and then they're paying their taxes in China. but you know, when they're shipping the same to another country, from China to the United States, then they're gonna have to pay taxes on. you know, going into the country and custom fees and stuff like that. but a lot of times you'll see, if you've ever ordered a product from Aliexpress, you know maybe it cost you 50 bucks but on the packages they declared it's like five bucks and the reasoning behind that is because they want to minimize the risk of, you know, getting expect inspected in, getting charged more tax or paying more custom fees because to more expensive value. so I don't want to dry out this video any longer. if you guys have any specific questions, just drop them in the comments below and I'll make sure to get back to 300 this video. make sure to leave a like, comment and subscribe, peace.