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Can I avoid sales tax from Dropshipping nexus

New Member
3 0 0

I am opening an online clothing store in Texas. I am using a dropship wholesaler in California. According to what I've read, that means I have nexus in California. I'm trying to keep the sales tax limited to my home state, Texas. Being as I'm just starting my buisness and want to reduce the amount of headache of collecting sales tax for two states. On my shopify website, I have the option to choose which states I sell to. Which means I can choose to not sale to California, and take away the headache of having to collect sales tax there. Is this a good idea? Would this cause any issues? Would this work? 

Reply 1 (1)
17 0 3

Hi Chris!

Congrats on opening up your store. Californians are responsible for a lot of online purchases. I'm not sure it makes sense to avoid selling to the state simply to avoid sales tax nexus. But you need to do what's best for you. 

If you do need to register in California, applying for a sales tax permit in California is free. As for collecting sales tax through Shopify, it's a breeze. I recommend reading TaxJar's Sales Tax Guide for Shopify Sellers to get moving in the right direction. In addition, I think you'll find TaxJar's blog post about drop shipping to be super helpful!