I'm new to dropshipping so I'm looking for some advice on selling to the US. I'm planning on selling from aliexpress directly to the USA by using the website I have created on shopify. I'm currently living in the UK and so I know I would be required to pay UK income tax however, that is unfortunately where my tax understanding ends.
I currently have a domain, a website, I know the products I want to sell and how I want to advertise my site/products. What I want to know is do I register as a company in the UK or the US? Do I charge VAT/(sales tax?) on the products for the UK or US? Do I have to pay US income tax?
I have come across the term "economic nexus" whilst trying to understand how I begin my business but don't fully understand it.
Thanks to anyone that sees this and replies. If you need any more information or have any questions please fire away.
Hi @LGessentials! Gabby here from the Community Engagement team at Spocket.
It's been quite a while since you posted this so not sure if you were already able to figure this out. In any case, I did some research on the internet and according to most experts in the field, registration of a dropshipping business if you're just starting out isn't necessary. Registration is up to your discretion if you want to do a major expansion of your business and want to get certain benefits. Here's a thread I found on Quora that discusses this specifically: Do I need to register my dropshipping business as a company in the US, or in my home country?. Similarly, on the topic of taxes, here's an article from our Spocket blog that expounds on this topic: How Dropshipping Affects Sales Tax.
Also, since you mentioned that you'll be dropshipping from the UK to the US, have you considered using Spocket? It's a dropshipping app that I think will serve your business better as the platform has a selection of items from the the US, as well as the EU. Depending on your preferences, you can choose to source out products from suppliers from either, but being that you're catering to mostly people in the US, getting items from US suppliers would benefit you greatly. Doing this greatly reduces shipping times, as opposed to items shipped from AliExpress - with Spocket, if you're shipping from the US to the US, it's usually 1-3 days (3-5 at most).
Here's a sample product that fulfills this criteria:
Should you be interested, you can find out more on Spocket's website! Please feel free to respond to me here as well if questions from you arise. In any case, I hope the info and resources I shared help you out if you haven't figured out the issue you raised yet.