Should I charge sales tax and how much income tax should I pay?

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viky
Excursionist
33 1 2

Any answers are highly appreciated

Our company is currently registered in MN, USA. We dropship from China. We pay taxes when we buy from vendor. We sell in USA and Canada. All the money goes in bank account in India (we are in process of opening bank account in USA). We have EIN no. and SSN no. of our single member LLC.

We do not keep any inventory in USA. 

A brief history- Company was initially registered in India, then recently we registered as a domestic llc in Minnesota. This is serving as a brand new company, however since our bank account opening in USA is still in process, transaction are still happening via indian bank account. Owner of company in India is different from owner of company USA.

In this case does MN become our tax nexus? and does it mean we charge MN customers sales tax?

We have not started charging customer sales tax yet. How do we handle taxes on transactions which already took place?

Do we file income tax and annual revenue?

Please be polite in your answers, we are new to this and trying our best to get legally straight.

 

Thank you.

 

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Victor
Shopify Staff
Shopify Staff
784 68 194

Hi @viky,

Thank you for reaching out and for breaking down the situation with your business and online store. I will say first of all that if you are looking to better understand your tax obligations, we would always recommend speaking to a tax professional. The advice we can offer is generic and may not apply to your situation, whereas an informed tax professional can provide detailed information related to your own, specific situation. Nonetheless, I will be happy to try and offer you some guidance here.

If your company is based in Minnesota and registered in the state, this likely constitutes as a tax nexus and you will be required to charge and remit sales tax for orders placed from customers in Minnesota. I would recommend checking out this article on the tax blog TaxJar, which provides more information on who needs to register for a sales tax permit in Minnesota and how you can do it. 

In terms of orders you've already received but not charged taxes for, I would assume that you are still liable to pay sales taxes on them if you had a nexus in Minnesota in this time and the orders came from customers in Minnesota.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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viky
Excursionist
33 1 2

This is an accepted solution.

Thank you Victor. I have read there is something called a sales tax exemption certificate. Using that, my aliexpress vendor cannot charge me sales tax. Is it right? how to to get that?

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Victor
Shopify Staff
Shopify Staff
784 68 194

This is an accepted solution.

Hi @viky,

Tax exemption certificates do exist but the ability to get one varies depending on your location and circumstances. This is not something I would be able to offer direct advice on, so would recommend to either consult your local authority's tax laws and/ or speak to a professional tax consultant to see if you and your business would qualify.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

viky
Excursionist
33 1 2

Thank you

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