Hey there everyone! Hoping you can help me out.
Been wanting to fully dive into Shopify, but things like how am I gonna pay my taxes and stuff always holds me back due to some weird fear haha. But no one ever said having your own business was easy.
I currently live in Florida where the tax rate is 6%. However, Florida doesn't charge taxes on services, only material goods. If I have my LLC set up here in Florida, and I'm going to be drop shipping from Ali-express (which is from China) would I have to charge a sales tax? I know we have to figure out if we have nexus in the state, but I don't really have a physical presence such as an office or warehouse since all the inventory is held in China digitally. Hopefully, someone can help me out.
EDIT: Forgot to mention that I will only be selling in the United States for now.
Congrats on getting started. Every U.S.-based business has nexus in at least one state; we call this the “home” state. For you, that state would be Florida. Even if you're drop shipping, your very presence in Florida gives you nexus.
Once you start making sales, nexus in other states will depend on a few factors, and it's possible Florida will remain the only state you have nexus. To learn about these factors, I recommend reading this TaxJar blog post about drop shipping relationships.
Leon here from Shopify Support.
The tax article posted above is a great resource to work from! In addition to that, you can find the guide to setting up US Taxes in your Shopify store on this page.
Feel free to post any other questions you have below.
Hi Taurick, great questions! Sales Tax compliance can be daunting, but with a little poking around you can find the answers you're looking for. That said, it's always wise to consult with a SALT (State and Local Tax) expert especially as a new seller. Sales Tax is something you want to get right, so understanding where your business triggers nexus is key. I'm on the social media team at Avalara and we help businesses get sales tax right. This TaxRates guide to Sales Tax in Florida is chock full of great information for sellers that you should find helpful. Oh, and congratulations on getting started - wishing you much success!