Taxes with this business model – Graphic Tee Coach

Taxes with this business model

Steve’s AnswersCategory: QuestionsTaxes with this business model
Samuel F asked 4 months ago

Hi Steve,
Being really new to even the concept of running my own business, I’d love a rundown on how taxes work with the Print on Demand Dropshipping business.
Tshirtgang operates out of Canada. I live in Washington State, USA. I understand that TSG charges a certain fee/tax when a customer is in Canada, but should I also be collecting a tax from WA state customers to report on come tax season? Or is this all handled because I pay all of the fees associated with the product when I purchase from TSG?
Long story short: Do I need to worry about taxes and consult a professional, or does my purchase of the product from TSG take care of it?
 

1 Answers
Steve Staff answered 4 months ago

Excellent question Samuel.

First, let me say that I am by no means an accountant so anything I say should be vetted by a tax professional in your area of residency. 

To my understanding, each state has its own set of regulations.  So, you’ll need a consultation with someone in your area to discuss.  Generally speaking, you are running a business.  Therefore you should be able to take advantage of any income tax deductions to which any business is entitled.  As for sales tax, that is a fluid subject when it comes to online sales.  The situation is further complicated by the fact that your product orders are fulfilled and shipped by a third-party from outside your state.  So, your local tax professional will need to answer the question about from whom you should collect sales tax and to whom you should pay it.

Steve