I just opened my store. I used to be on Etsy and find myself a bit confused with the tax situation. I am not a dropshipper. I sell crafts. I don't have a brick and mortar store. I run everything from my house. This isn't my full time job as I am a teacher by day. I am a bit confused when collecting sales tax in Florida. Do I collect from those who also live in Florida or anyone in the US? Also, in regards to a 1099, does that only come from shopify if you use shopify payments? Or does it also come from Paypal if you choose to use them? Thanks.
Julie here from Shopify Support.
First off, welcome to Shopify! I appreciate you sharing some information about your business and it's great to see that you're focusing on some important aspects, like sales tax.
Whether you should be charging customers taxes would be a question best answered by a local tax expert, as they are the most qualified to offer tax advice. That being said, you can actually set your Shopify store to automatically manage the tax rates you charge to your customers. When this is set up, customers will automatically be charged current sales tax rates based on where the product is being shipped from (Florida), as well as where the product is being shipped to. Because Florida is a destination state, the sales tax that's charged will be based on the customer's shipping address. To ensure that your tax settings are configured correctly, I recommend referring to our help doc on setting up US taxes, which will walk you through the process step by step.
While Shopify helps to automate charging sales taxes, Shopify doesn't remit or file your taxes for you. When it comes to tax reporting, you will receive a 1099-k if you have processed over $20,000 as well as 200 transactions through Shopify Payments. This form is generated by Shopify and will be provided to both you and the IRS. Just keep in mind that the 1099-k will only include transactions processed on Shopify Payments, so if you meet the requirements for a 1099-k form through a third-party payment provider (like PayPal), then that provider will be responsible for generating it for you.
It's great to hear that you're selling crafts. What kind of crafts are you making? If you're looking for some inspiration on how you can market your store online, I recommend checking out our free Shopify Academy course, "Turn Your Hobby into a Business", which covers some of the fundamentals of building your own brand. In this course, you'll learn about the importance of quality product photography, marketing techniques, and even gain some insight on how you can build out your shipping strategy. I think you'll find it not only useful, but inspiring as well.
I hope this helps clear things up! If you require any further clarification, feel free to respond here and I'd be happy to further assist.