Results 1 to 6 of 6

Thread: Do i need to pay income taxes for my drop shipping website?

  1. #1
    Registered User
    Array
    ccody45's Avatar

    Join Date
    Nov 2016
    Location
    Columbus,OH
    Posts
    4

    Question Do i need to pay income taxes for my drop shipping website?

    Hello I am a young entrepreneur who is currently creating an online drop shipping website and I have been trying to figure all the legal stuff that ill need for my upcoming website and one thing that has been on my mind the most is whether or not ill have to pay sales tax or income taxes? BTW I live in Ohio.

  2. #2

    Default

    Very good question.
    Interesting fact, the average small business has a higher likelihood of being audited by their state then the IRS and in my experience the state taxing authorities can be more ruthless.
    As for the question itself you are really talking about nexus.
    Nexus concerns weather you have strong enough ties to a state to create a legal requirement to charge and remit taxes.
    So you are in Ohio and thus you would probably have to charge taxes there but remember that you have city and country taxes in Ohio to collect too so make sure you know where your customer is and what taxes are actually owned. I have filed many sales tax returns in Ohio and its actually very easy to do.
    Generally nexus is established anytime a business has people, property or assets coming out of a state.
    It sounds simple enough but in reality its more complicated. Just look at Amazon, they pretty much have to collect taxes on every sell even through the Amazon sellers may not actually have nexus in that state.
    There is a internet sales tax idea that keeps getting kicked around on the federal level and some states are creating all kinds of fun new tax rules for internet services being provided totally online. Many cities and states are now trying to tax Netflix and other pure internet plays even though they do not have any presents in that state and the client is connecting to a server in some other state or even country.
    In the end the people you are selling to are not sending use tax / the sales tax they should have paid to their state, (because you did not charge them) and it is easier for the state to go after businesses like yours, (out of state and unable to vote in their state) then to go after their own citizens, (who do vote). So they are looking for ways to create nexus and thus make you charge and pay taxes.
    In short sales tax rules are changing at lighting speed so keep an eye on it.
    Phillip Zagotti
    Partner - Zagotti & Burdette CPA, LLC
    http://znbcpa.com

  3. #3
    Web Consultant
    Array
    Join Date
    Aug 2008
    Location
    Las Vegas
    Posts
    9,856
    Blog Entries
    1

    Default

    Yes, you need to pay income tax. When it comes to sales tax and ecommerce, recent clients have had me set up sales tax for in state sales.

    You can simply call the tax department in your state and get a direct answer in probably about 5 minutes.
    They also have a very informative website.
    Ohio Department of Taxation > sales_and_use

  4. #4
    Registered User
    Array
    ccody45's Avatar

    Join Date
    Nov 2016
    Location
    Columbus,OH
    Posts
    4

    Default

    Thanks for the information I appreciate it!

  5. #5

    Default

    Yes you need to pay taxes for everything.

    Its good that you have been clearing your mind related to legal aspects on dropshipping, because many young entrepreneurs doesn't consider legal aspects of dropshipping and start doing dropshipping.

    As a result when taxes and other stuff comes forward they get confused and are not ready to accept these taxes, which in first place is mandatory.

    Since you're from ohio y
    ou can call the tax department in your state and get a direct answer.

  6. #6

    Default

    Here are some good resources to get started.

    https://www.ohiosos.gov/businesses/i...business/#gref

    https://business.ohio.gov/wps/portal...vZ0FBIS9nQSEh/

    You'll want to get a state business license because business is conducted at the state level. And it'll depend on how your incorporate. Good luck.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •