New to the Shopify and business game and had some questions. I currently live in michigan but most of my orders are going to other states such as California, Washington, Florida etc. should I be charging Michigan 6% sales tax on these products when the orders lay outside of michigan? I have taxes setup in Shopify but have yet to see it charge any sort of tax on these orders. If anyone has some answers id love to know.
First of all, I am not qualified to offer legal or tax advice and you should always consult a tax expert regarding these questions.
With that said, sales tax laws vary from state to state, but generally speaking, you are only required to charge tax on sales to states where you have a nexus. In addition, most states now require you to charge tax when your overall sales to that state reach a certain threshold. Also, you would only charge the MI tax rate to sales shipped within MI. If you charged tax on sales shipped to FL, for example, you would charge the FL tax rate.
A nexus means your business has some kind of "footprint" within a given state (i.e. an office, a warehouse, or you have employees that are based within that state).
The threshold rules generally apply when you reach a certain level of sales within a calendar year for a given state, and the threshold levels vary by state. For example, Kentucky requires you to register to collect and remit sales tax if you sell more than $100k or make more than 200 individual sales transactions into the state.