Question about Dropshipping (To USA from China)

[nirvana9832]

I have done loads of research, but the thing that is scaring me the most about starting this, is the Tax and Accounting.

If I am dropshipping, from china to USA, What exactly do I do during tax season? Just report my income with a 1099? or do I need to account for ALL of my sales, including the city and state of the customer, etc?

This is the only bit of information people are afraid to talk about, be it in blogs and videos I've searched for, or they just don't want to share the information?

I will plan to use shopify and aliexpress. Any information would help heaps..

Thanks.

 

[nirvana9832]

I realise this is in the wrong section, Oops. Can't delete, so can a Mod move it if possible?

 

[deedee1whoa]

Even though I won't be getting into dropshipping, I'd like to see the answers to your questions...
Dropshipping for me could get very expensive so, I'll pass (for now). To you, good luck!

 

[toml3030]

If I am dropshipping, from china to USA, What exactly do I do during tax season? Just report my income with a 1099? or do I need to account for ALL of my sales, including the city and state of the customer, etc?

These are the legal requirements

Federal, State, and Local.

Federal - You must file a tax return on your business, either as part of your personal if you are sole proprietor or separately as a corporation or partnership. You collect all 1099's from your payment processors and report it as income.

State - You must keep a legal entity alive with the state you are operating out of (not only where the corporation is registered). Each state also has a franchise tax board or some equivalent that collects sales taxes. If you have any physical presence in a city, for dropshipping it would probably be the registered shipping address, you must collect sales taxes for that state.

Local - Some cities have their own taxes (Los Angeles for example charges 0.1% of sales), you may also need to file a DBA (doing business as name) depending on the location.

 

[whiteogreguy]

I have a little knowledge in accounting and (on euro law) dropshipping is the equivalent of intermediary and if I were to declare my dropshipping store to the state (which I won't) that's what I'd declare. I intermediate and get a comission thus I pay taxes on my comission minus expenses. There's many ways to avoid taxation legally (get the moeny from your store into a skrill/payoneer acct then buy btc with it and cash out btc back home) but you'd still pay fees to 3rd parties so moneywise you'd be in the same place but it still makes sense because you'd avoid the hassle of dealing with the govt.

 

[randybishop]

Here ya go bud:
https://www.paypal.com/us/selfhelp/...RS-Will-I-receive-a-1099-tax-statement-FAQ729

 

[IPlease]

I am not sure. My sister used to sell Avon, and she just kept track of expenses and stuff. She did not keep track of addresses and such.

 

[nirvana9832]

If you have any physical presence in a city, for dropshipping it would probably be the registered shipping address, you must collect sales taxes for that state.

So that would equate to my home address where I do the business from? Do I have to worry about the states I'm shipping to? Thanks for the information.

 

[nirvana9832]

Even though I won't be getting into dropshipping, I'd like to see the answers to your questions...
Dropshipping for me could get very expensive so, I'll pass (for now). To you, good luck!

There are ways to start very small. You can't get around the domain and shopify costs, but you can start for free with woocommerce(but it's a bit more hands on / difficult). I'd rather just budget a few hundred a month, since I work full time, in hopes to scale this up someday and use the easier website.

 

[robertforveve]

I have a little knowledge in accounting and (on euro law) dropshipping is the equivalent of intermediary and if I were to declare my dropshipping store to the state (which I won't) that's what I'd declare. I intermediate and get a comission thus I pay taxes on my comission minus expenses. There's many ways to avoid taxation legally (get the moeny from your store into a skrill/payoneer acct then buy btc with it and cash out btc back home) but you'd still pay fees to 3rd parties so moneywise you'd be in the same place but it still makes sense because you'd avoid the hassle of dealing with the govt.

May I ask you what site are you using to withdraw BTC? Thanks for your time

 

[EarthboundImmortal]

Are you even dropshipping yet? If you are doing small scale ($100-$1000) a month just start selling. After that look deeper into taxes and such or hire someone. Every location and situation are different. I guarantee you not everyone who dropships is a tax wiz.

 

[nirvana9832]

Are you even dropshipping yet? If you are doing small scale ($100-$1000) a month just start selling. After that look deeper into taxes and such or hire someone. Every location and situation are different. I guarantee you not everyone who dropships is a tax wiz.

I have not started, I've just been doing weeks worth of researching, and I got to the point of taxes, and noticed that little to no information is being shared, and the information that IS shared, is disclaimed with "I am not legal advice" and people being turned off by the subject. So I wanted to see what you guys thought. I'f i start scaling up I'll just be careful, and come january 1st walk into a tax place. Thanks!

 

[EdgarW]

I have done loads of research, but the thing that is scaring me the most about starting this, is the Tax and Accounting.

If I am dropshipping, from china to USA, What exactly do I do during tax season? Just report my income with a 1099? or do I need to account for ALL of my sales, including the city and state of the customer, etc?

This is the only bit of information people are afraid to talk about, be it in blogs and videos I've searched for, or they just don't want to share the information?

I will plan to use shopify and aliexpress. Any information would help heaps..

Thanks.

Hi! Read this https://alidropship.com/taxes-in-drop-shipping-business/ I think it may help. So it seems you should better find a professional consultant

 

[whiteogreguy]

May I ask you what site are you using to withdraw BTC? Thanks for your time

I don't. Holding on to my bitcoin

 

[nirvana9832]

These are the legal requirements

Federal, State, and Local.

Federal - You must file a tax return on your business, either as part of your personal if you are sole proprietor or separately as a corporation or partnership. You collect all 1099's from your payment processors and report it as income.

State - You must keep a legal entity alive with the state you are operating out of (not only where the corporation is registered). Each state also has a franchise tax board or some equivalent that collects sales taxes. If you have any physical presence in a city, for dropshipping it would probably be the registered shipping address, you must collect sales taxes for that state.

Local - Some cities have their own taxes (Los Angeles for example charges 0.1% of sales), you may also need to file a DBA (doing business as name) depending on the location.

Is Avalara / taxjar / taxify good for me to use? is it worth paying the extra money since i have no clue of what I'm doing? I understand I won't make a million overnight, but I just want to protect myself.