How do I handle tax collection for my new eCommerce business?

How do I handle tax collection for my new eCommerce business?

Culture1
Visitor
1 0 0

I am new to eCommerce and I am confused by taxes. I haven't launched my website officially because I don't know what I should do for Taxes. I am located in Canada and I am using Printful to create T-Shirt and Hoodie designs. I want to sell my products to Canada, US, UK and the European Union. My main question is do I have to start collecting taxes from the get go and if so how do I begin to set this up. Thank you.

Reply 1 (1)

TeemuEAS
Shopify Partner
147 1 24

Hi Culture1, 

 

We are very familiar with the compliance challenges for companies using Printful services. To start with you have to look at it from the customer point of view: any post-purchase action will increase returns significantly. So not providing the possibility to pay ALL of the fees at checkout is in our experience not a viable operating model. 

 

Regardless of what some "experts" are saying, you are considered to be warehousing the goods in the country where they print and ship it from. The reasoning is that Printful invoices you and you are visible in the invoice to the customer. And, since you are warehousing goods you will need to have at least a VAT registration to all of the countries. 

 

Unfortunately EU countries vary in complication and therefore cost. Latvia is their main pricing site and you can expect costs of over 1.000€ annually for compliance there. Spain is another site and they are much cheaper and we can help you with it. Unfortunately upfront charges will be about 500€. Expect other EU countries to be in the same region. If you register for VAT in UK you can have your printing done in EU. 

UK VAT registration is much cheaper, in fact you can do it yourself: https://www.access.service.gov.uk/login/signin/creds?aoc=Y

With tools like EAS Compliance Solution, selling to UK is automated from registration on. With the UK registration you can also claim back the paid VAT. This cost side of VAT will have to be handled by your accountant, but sales side is automated with EAS app. If we register you for EU IOSS you can easily deliver to EU from UK - which is our recommendation for the start. 

 

In short, you will have to limit the sites where Printful is producing for you in Europe. Canada and US I don't have an answer for you - yet. 

 

Here is the link to our app: https://www.access.service.gov.uk/login/signin/creds?aoc=Y

more about our solution: www.easproject.com 

 

We'll make it work like you don't even notice it! So feel free to get in touch with us for more information

EAS EU & UK Compliance app is a fully automated European VAT solution for Shopify.