united-states, taxes, retail, importingI’m thinking of starting an online retail for electronic parts. Like microchip, passive parts etc.
I know how to create everything for the website and follow merchant credit card rules. And done so in the past. But for someone else.
So I never got a good idea how they setup everything business wise plus the company had a warehouse in florida. My product can range from here in az, US to japan.
So I can assume sales tax may work differently
.
Plus I don’t know what paper work I need.
You must pay sales tax for any state where you have a physical presence. If you are solely operating out of Arizona I believe you would only charge sales tax for sales shipped to Arizona addresses. Get a state business license and take a look at your sales tax report forms. In most cases there is an exempt line for out-of-state sales. If you end up shipping from other states you will need to charge sales tax in those states as well.
There is a lot of debate on this issue. You can read more about it here.
When you export to another country you do not need to collect any additional taxes. The customs/duties will usually be charged to the customer when they receive the product. Unless you research further you will not know what those additional expenses might be. You should explicitly state this in your shipping policy as many customers may not be aware or the additional fee for customs and duties. The customer may choose to not accept the package due to the cost of customs/duties in which case the product is usually returned to sender or lost in the mail (I know this from personal experience using USPS). If you ship using a private mail carrier like UPS or Fedex then you may be retroactively charged the customs/duties; you would need to clarify that when you ship the package.
I am not a tax professional. You may want to seek professional advice in your state. There are organizations of professionals that will give you advice for free like the Small Business Administration or SCORE. You can often find a local SCORE chapter. SCORE usually has many local seasoned business professionals that will help you out.
First, sales tax has nothing/little to do with the IRS (income tax). Sales tax is assessed by the individual states and local authorities. What creates ‘nexus’ varies from state to state but is usually some form of physical presence by you or an agent (even 3rd party) of your company.
Second, if you are setting up a large website, you may want to look into a service such as Avalara, or TaxJar, among others, that automates sales tax calculation and recordkeeping, and even filing for you. At the least, their representatives can be very helpful, if not sometimes a bit on the persistent side.
DISCLAIMER: This is NOT legal advice, and I am not an attorney. Check the relevant laws and consult with an attorney!
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