How do I set up tax settings for drop shipping on Shopify?

[CosmicDews]

I am new Shopify user and need help on Tax settings for my store. I'll be doing drop shipping and POD to US and most vendors are from China. I am planning to launch store in few weeks, but confused, how to work on tax collections. Any inputs are welcomed.

Thanks.

[Victor · Accepted solution]

Hi @CosmicDews,

Thank you for getting in touch. Your tax responsibilities will be determined primarily on where you are selling to, and where your business is based. Are you based in the United States or do you just intend to sell there?

When selling products in the United States, whether or not you are required to charge sales taxes typically depends on whether you have a tax nexus in a state. You can be deemed to have a tax nexus in a state based on physical factors, such as having employees or a warehouse in a state, or on economic factors, such as making a certain amount of sales over a specific threshold in a state. If you are deemed to have a tax nexus in a state, then you'll likely need to register for sales tax with the state's tax authority and charge and remit sales taxes when customers from that state place an order on your store.

Shopify provides plenty of information on sales taxes in the United States, some of which you can find in the links below:

• Registration-based taxes in the US
• Setting up US taxes
• US taxes reference
• Sales Tax Uncertainty? Shopify's Sales Tax Insights Decodes your Obligations in the US & Canada

I hope this helps but please let me know if you have further questions. Please also be aware that while Shopify is willing to offer generalized advice to help merchants understand their tax obligations, we would always recommend merchants speak with a tax professional if they are unsure of their responsibilities.

[CosmicDews]

Thanks a lot Victor for the detailed information.