I have a drop-ship Shopify online store with a California business address. When setting up a sales tax region I used California because I pay my sales taxes there, however, I noticed that when people are buying from other states, they are not being charged sales tax which doesn't seem right. It also doesn't seem right that I would have to register and pay taxes in each of the 50 states each month.
Can somebody who has gone through this process tell me briefly what the appropriate setup should be given the above? I don't want to have any liabilities as you can imagine.
Thank you for posting in the Shopify Community. We're unable to provide tax advice, and I recommend contacting a tax specialist in your area to determine which liabilities you have. I did, however, want to share these resources with you that have a lot of helpful information:
This section has some context on what you were looking for:
In the United States, whether you need to charge tax is based on nexus. Nexus is a connection between your business and a state, whether physical or economic. If you have nexus in a particular state, then you probably need to charge sales taxes there. If you use Shopify Tax as your tax service, then the Manage tax liability page can help you to determine where your store has nexus.
Ultimately, in order to be sure what specific tax obligation your store has, you'll need to contact a tax specialist. To make things easier, you can hire a Shopify Expert that specializes in U.S. sales tax! Shopify experts are highly-skilled designers, developers, and consultants who specialize in building successful brands, businesses, and Shopify stores. Each expert is reviewed before joining the marketplace, so you know you can trust them to get the job done.
Let me know if you have any other questions, and I'd be happy to help!
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