crg28 Posted June 22, 2007 Share Posted June 22, 2007 Hopefully someone here can help. I'm opening an online store using a dropshipper. I live in Florida and have 2 questions about sales taxes: 1) If the LLC that owns my online store is registered in Florida, the dropshipper in PA, but their shipping warehouse in GA. Would I have to charge sales taxes to customers from what state? PA? GA? or FL? 2) Considering I'm phisically in Florida and this could be a large mkt, can I organize my LLC in Delaware and operate from my house in Florida in order to avoid charging my Florida Customers Sales Taxes? Please advise... Rod Link to comment Share on other sites More sharing options...
Guest Posted June 22, 2007 Share Posted June 22, 2007 Hopefully someone here can help. I'm opening an online store using a dropshipper. I live in Florida and have 2 questions about sales taxes: 1) If the LLC that owns my online store is registered in Florida, the dropshipper in PA, but their shipping warehouse in GA. Would I have to charge sales taxes to customers from what state? PA? GA? or FL? 2) Considering I'm phisically in Florida and this could be a large mkt, can I organize my LLC in Delaware and operate from my house in Florida in order to avoid charging my Florida Customers Sales Taxes? Please advise... Rod I can't speak much for Florida as I don't live there, and I am neither an accountant nor an attorney. Let me tell you the way that it works here in Illinois, and hopefully it will at least get you on the right track. I run my shop as a sole proprietorship based out of Illinois and I, too, run a dropshipping-only business. The only time that I am required to charge any of my customers sales tax is if the product itself is being delivered to an Illinois address. At that point, I charge the state level (6.25%) and it is the customer's responsibility to pay any local (city, county, village) taxes due on the product they ordered. Likewise if I have a customer in Florida order my products and ship it to their home, then they don't have to pay taxes to me, but rather they are responsible to pay their own state whatever taxes are owed. To find a "workaround" so your Floridian customers don't have to pay sales tax just sounds like a "black hat" kind of method, and frankly could land you in a heap of trouble down the road... even if it works for now. I definitely suggest contacting your state AND local authority in reference to how this works in your state, but I can't imagine it would be much different than in mine. Another example: An Illinoisan wants to ship a gift to their Floridian friend. The purchase comes from Illinois and product goes to Florida. No sales tax is charged. Clear enough? Again, I encourage you to contact your local tax authorities, but hopefully that helps. As far as I know, the origin of the producer and the product itself have nothing to do with how to charge taxes. Hope that helps! ***I AM NOT AN ATTORNEY NOR AN ACCOUNTANT*** Link to comment Share on other sites More sharing options...
crg28 Posted June 22, 2007 Author Share Posted June 22, 2007 Moonlighter, Thanks for the reply! I was under the impression that my customers from GA and FL would have to pay taxes. Georgia because the dropshipper's warehouse is there and Florida because I'm here..... Although I just found out that the largest e-tailer in my industry does not charge sales taxes in Florida, even though their warehouse is in Florida. It is just a shame that considering how big Florida is in my industry segment, I will lose the competitive advantage for customers here. Link to comment Share on other sites More sharing options...
Guest Posted June 23, 2007 Share Posted June 23, 2007 Moonlighter, Thanks for the reply! I was under the impression that my customers from GA and FL would have to pay taxes. Georgia because the dropshipper's warehouse is there and Florida because I'm here..... Although I just found out that the largest e-tailer in my industry does not charge sales taxes in Florida, even though their warehouse is in Florida. It is just a shame that considering how big Florida is in my industry segment, I will lose the competitive advantage for customers here. I wouldn't think that you would lose a competitive advantage at all for a couple reasons. First, since Florida has a sales tax, your Floridian customers would be used to paying sales tax regardless. Now here's the kicker: in my county, the base sales tax rate is 8%. The way this works is that the state claims 6.25%, and the difference is divided between the city and the county. Each county and even the cities/villages in Illinois have their own rates above and beyond the state level. Since the customer is technically legally responsible to pay the difference, when they place an order on my site and ship to an Illinois address, they only are required to pay me the 6.25% state level whereas they would be accustomed to paying 8% or more based on where they live. Actually they would then have more reason to shop at your store than at a brick and mortar store if the Florida taxes work the same way.... since they would only be paying the state-level tax rate! :) I'm certain not all consumers feel this way, but I personally prefer to give my business to local businesses as opposed to chains... hence a website purchase from someone in my own state would be more attractive than an out-of-state purchase. And the tax is less than I'd be accustomed to paying anyway. Still, be sure to contact your local tax authorities to double check this, but like I said, I can't imagine it being all THAT different from Illinois or any other state. Link to comment Share on other sites More sharing options...
TheJackal Posted June 28, 2007 Share Posted June 28, 2007 You would only have to charge tax for your Florida customers. Your drop-shipper's business and warehouse location doesn't matter at all so long as you don't own them. If your competitor has a warehouse in Florida, they'll have to collect tax because the exchange of goods is in the state where they have operations. - The Jackal Link to comment Share on other sites More sharing options...
crg28 Posted June 28, 2007 Author Share Posted June 28, 2007 You would only have to charge tax for your Florida customers. Your drop-shipper's business and warehouse location doesn't matter at all so long as you don't own them. If your competitor has a warehouse in Florida, they'll have to collect tax because the exchange of goods is in the state where they have operations. THanks TheJAckal. It is very frustrating because it seems like noone really knows the answer....According to you, this national e-tailer should charge taxes for customers in Florida, but they don't. It is hard to believe they are breaking the law since they have been around for a while and they are the largest retailer in the world for this industry. Link to comment Share on other sites More sharing options...
Guest Posted June 28, 2007 Share Posted June 28, 2007 THanks TheJAckal. It is very frustrating because it seems like noone really knows the answer....According to you, this national e-tailer should charge taxes for customers in Florida, but they don't. It is hard to believe they are breaking the law since they have been around for a while and they are the largest retailer in the world for this industry. It is possible that they do, in fact, collect tax from Florida customers but that it is not advertised as such. There are some local restaurants around my city that include tax in their prices so they have even amounts for all the entrees. They do collect tax from customers it just doesn't "feel" like they do. Larger corporations can have higher markups due to business volume. As a result, they might just eat up part of their markup with the tax itself. Just a thought. :) Link to comment Share on other sites More sharing options...
crg28 Posted June 29, 2007 Author Share Posted June 29, 2007 It is possible that they do, in fact, collect tax from Florida customers but that it is not advertised as such. There are some local restaurants around my city that include tax in their prices so they have even amounts for all the entrees. They do collect tax from customers it just doesn't "feel" like they do. Larger corporations can have higher markups due to business volume. As a result, they might just eat up part of their markup with the tax itself. Just a thought. :) I thought about it, but after I ordered an item myself from this site (I'm in Florida) I realized they do not charge taxes here.... Link to comment Share on other sites More sharing options...
Guest Posted June 29, 2007 Share Posted June 29, 2007 I thought about it, but after I ordered an item myself from this site (I'm in Florida) I realized they do not charge taxes here.... I don't know a whole lot about this, but I believe this can be done if you are a foreign corporation, that is to say incorporated in another state and doing business in Florida. I wouldn't recommend trying this without an attorney and/or accountant since the process is very complicated and you could land yourself in a mess of trouble if not doing it correctly. Not only for this reason, but also because it can be very expensive to do this and most small businesses can't afford the up-front cost associated with organizing a foreign corporation. Link to comment Share on other sites More sharing options...
TheJackal Posted June 29, 2007 Share Posted June 29, 2007 Tax laws like all laws can be bent if you know the technicality. The national retailer could have easily circumvented the tax if the warehouse is not operated by the 'wholesaler'. That means that the warehouse is actually owned by another company that does fulfillment for them. - The Jackal Link to comment Share on other sites More sharing options...
jhande Posted September 15, 2007 Share Posted September 15, 2007 Hopefully someone here can help. I'm opening an online store using a dropshipper. I live in Florida and have 2 questions about sales taxes: 1) If the LLC that owns my online store is registered in Florida, the dropshipper in PA, but their shipping warehouse in GA. Would I have to charge sales taxes to customers from what state? PA? GA? or FL? 2) Considering I'm phisically in Florida and this could be a large mkt, can I organize my LLC in Delaware and operate from my house in Florida in order to avoid charging my Florida Customers Sales Taxes? Please advise... Rod I realize this is an old post, but I just couldn't resist... :-" 1) It makes no difference where you are getting the product to sell (dropshipper or warehouse). What does matter is where you are selling from and to who and where. Your store is registered in Florida so you must abide by the Florida tax laws. Besides charging tax to local customers, find out if you need to charge tax to any other states. The tax laws have been changing for online purchases. 2) How exactly would you pull that one off? Do you have a business partner residing in Delaware? "Although members of an LLC are free to set forth any matter they desire in the Certificate of Formation, they are required to state only the name of the LLC, the address of its registered office in Delaware, and the name and address of its registered agent for service of process in Delaware." :huh: - :: Jim :: - - My Toolbox ~ Adobe Web Bundle, XAMPP & WinMerge | Install ~ osC v2.3.3.4 - Link to comment Share on other sites More sharing options...
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