So I’m in the process of trying to get my tax situation figured out and determine what I need to do thus far as far as legalities are concerned. I realize that I’ve set a physical address (my residence) for my store all throughout my store details. I did this in the very early stages of getting started with Shopify and I’m afraid I may have made a mistake. For the record: I’m dropshipping, and I have no warehouse. No physical location. I source my products from China. My business is entirely online unless the place from which I operate is considered my business address but, in this case, my guess is that it isn’t. Do I need to change this? I noticed that under my tax liabilities it’s only got my home state listed despite the fact that I’ve made sales into other states (Not enough for nexus and whatnot). I’m afraid this has something to do with my “physical address” in my admin. What do I need to do? I don’t want to run into issues later on. Any help would be greatly appreciated.
You are correct that your physical address is not considered your business address if you are dropshipping and have no warehouse. In this case, your business address is the location from which you operate your business, which is likely your home.
You do not need to change your physical address in your Shopify admin. However, you should update your tax settings to reflect the fact that you are selling to customers in multiple states. You can do this by going to Settings > Taxes and duties and then selecting United States. Under Tax liabilities, you will see a list of the states in which you have made sales. If you have made sales in states other than your home state, you will need to select those states and then enter the appropriate sales tax rates.
You should also be aware of the following tax considerations:
You are required to collect sales tax in any state in which you have nexus. Nexus is generally established if you have a physical presence in the state, such as a warehouse or office. However, some states have economic nexus laws, which means that you may be required to collect sales tax in a state even if you do not have a physical presence there.
You may be required to file income tax returns in the states in which you have nexus. The income tax rates and filing requirements vary from state to state.
You may need to obtain a seller’s permit in the states in which you have nexus. A seller’s permit is a license that allows you to collect sales tax.
It is important to consult with a tax professional to determine your specific tax obligations
Well, that’s part of the problem. For some reason, I’m not seeing all the states in which I have made sales, as I said in my original post. I’m only seeing the state in which I’m physically located. That’s why I thought my address settings might have something to do with it.