Financing, tax rates, and accounting
Hi all my partner and I are setting up our first store and we're very confused in regards to tax. We are looking at print on demand suppliers and one that stood out for us was Gelato as they operate from multiple countries, allowing more localized printing and a speedier delivery to the customer. However upon reading their page on Taxes, we got confused https://apisupport.gelato.com/hc/en-us/articles/360017328060-Getting-Started-with-Taxes
We thought as the point of sale that we alone would be responsible for collecting VAT, and any transaction between us and the fulfiller would be business to business. However this post from gelato has us very confused. Do we pay taxes on our purchases from Gelato to sell to our customers? Do we need to charge extra to take into account this and cover us for any tax we are due to pay to the government? Or does Gelato collect taxes on our behalf so we don't need to collect/charge extra on our site with the Shopify tools, just pay the values they give us (and have already charged the customer)?
Any help would be appreciated, we are operating from the UK.
Thank you for getting in touch. I took a look at the documentation you've shared, and can see why you found it confusing. My guess would be that Gelato are simply sharing as much information they can re: their business and locations, as it may affect your own tax obligations as a business. However, I would bear in mind that this information is likely to be as general and non-specific as possible, and as they state, they cannot provide specific tax advice and recommend you speak with a tax professional as a result. The same caveat comes with any advice I can provide below.
My feeling is that as Gelato operate in and are based in numerous countries and tax jurisdictions, there are a variety of tax laws you need to consider when paying them for the creation and fulfilment of their products, and when you accept payments for the products from your customers. The B2B tax laws may differ from region-to-region, and when you're selling into different countries, the various locations Gelato operate in may affect the taxes you need to charge your customers. For example, the 14 US states they operate in may constitute as your business having a tax nexus in those states if that is where your products are being made and orders fulfilled from, which may impact your own need to register for sales tax in those states and charge customers sales tax if they are based in those states. I do not know for sure if this is the case, as each state's tax laws vary, but it's something worth considering.
The one thing I will say with some confidence is that I do not believe Gelato will collect sales taxes from your customers on your behalf, and pay them for you. My understanding is regardless of which supplier and/or manufacturer you are using, your own business will likely be required to handle the sales tax collection and remittance if you are collecting payments from customers. Again, though, this is general advice and the situation may vary in different regions and countries you and your business plan to sell into. Speaking with a tax professional is always the best solution if you are unsure of your obligations, and you can find some who specialize in Shopify stores over at the Shopify Experts directory.
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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