If you are retailing for a drop shipper do you have to pay taxes on total income?

Discussion in 'Dropshipping & Wholesale Hookups' started by toolbar1, Sep 14, 2012.

  1. toolbar1

    toolbar1 Registered Member

    Mar 10, 2009
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    Do you have to pay taxes on your profit as well as the money you send to the drop shipper? How about if the item is a virtual item?

    Can you write of the money you pay to the dropshipper as a business purchase?
  2. RobotDestruct

    RobotDestruct Junior Member

    Apr 4, 2012
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    Mother - Business Owner
    San Diego
    I'm trying to figure out the same thing. I'm a popular electronic cigarette brand online, and the person who wants me to drop ship for them has 3 popular e cig physical stores. They sell a whole different type of e cigs then I do and I would like to widen my customer base, but the issue of taxes is kinda making this a mess. I might just do it on my own, but it would have been nice to just throw the product on my site and have them do the rest. I don't want to pay taxes on the complete sale if I'm only getting 30%, ya know? Unless they can give me more of a cut, then this can possibly work.

    I talk with them about this issue on Sunday, so we will see, but hopefully someone can throw some insight into this thread.
  3. jackens

    jackens Newbie

    Aug 4, 2012
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    If you make a profit and your company/you work in legal way you have to pay income tax. Of course there many exceptions and different rules depend on your country etc. But there is no difference in selling products using dropshipping service than normal sale. In both situation you buy products from your supplier/wholesaler and sell them to your customer making profit. It doesn't matter if it is physical or virtual product. There is transaction there is a profit.