Video instructions and help with filling out and completing Which Form 5495 Payments

Instructions and Help about Which Form 5495 Payments

In this video I'm going to teach you what your tax obligations are as a drop shipper how to collect the right amount of sales tax and also how to file your sales tax returns surprisingly it is one of the questions that we get asked the most here at house outted which I guess isn't that surprising given how little information here is available out there on the internet for it and while this topic may not be the most exciting I should know I'm pretty tired today and I'm having to make this video about this topic and it's been quite challenging the reality is is that it's very important for you as an online seller to get it right now when you listen to this video at the start it's going to sound like it's quite hard and challenging to click the right amount of sales tax and to pay it but keep listening because I'm going to share with you an incredible tool that's going to make the process super simple even if you are a newbie and it doesn't matter if you're a drop shipping on amazon.com or with Aliexpress in a welcomer store or in a Shopify store because I'm going to explain all three of these so let's jump straight into the video now on a previous video with the fact that I am NOT qualified accountant and you should never use the advice that I'm giving you here in place of a qualified accountants every business owner should have it accounted it doesn't matter what business you are running you really should have one I also want to preface this video with the fact that this is only talking about collecting sales tax in the USA because drop shipping within the USA is something that we teach here at wholesale Ted but if you are outside of the USA yet drop shipping within the USA this video is very relevant for you so keep listing now I'm going to break this video down into the common questions that I get asked so let's move on to the first question question number one what taxes do I need to pay the answer to this is that you need to pay income tax and you also need to pay sales tax where applicable due to something that's called Nexus and I will explain what Nexus is shortly your own context obligations are pretty basic so won't go into that in this video the real tricky question is sales tax for those of you that don't know so taxes when a governing body places a tax on goods and services it is up to the seller of the good or the service to collect the sales tax and to pay it to the governing body in the United States sales tax is collected by individual states and not the federal government in addition states often don't just have a flat sales tax rate that you need to pay individual cities and districts will have their own taxes on top of the sales tax of the state as well usually you pay the state tax plus a local district tax plus a special tax which is sometimes included depending on the city for example let's take the state of New York in New York City which is of course pasted in the state of New York you would have to pay an eight point eight seven five percent sales tax rate this includes a four percent state tax a four point five percent local tax and a zero point three seven five percent metropolitan commuter transportation district surcharge in total this adds up to eight point eight seven five percent but instead if you didn't live in New York City and you lived in Buffalo which is a city that's also based in the state of New York you would have to be paying eight point seven five percent as your sales tax rate this of course includes the four percent state tax and a four point seven five percent local tax the City of Buffalo does not have any special tax so your sales tax rate if you were to sell goods and services in Buffalo would be eight point seven five percent and so even though Buffalo and New York City are both based in the state of New York you would have different sales tax rates for each city and something else to keep in mind is that some states in the USA are called origin states this means that you pay the sales tax rate of where you are physically located in that state this of course means that the sales tax rate that you were going to pay will not change and it will always be the same for all sales made within that state this makes it very easy to keep track of but some states in the USA a destination based and they make you pay the sales tax rate of wherever the customer is located New York is one of these states as we're sure you can imagine if you are obligated to click sales tax and add ISTA Baystate this means that the rate that you are going to pay is going to change constantly luckily there are automated tools that you can utilize to make this easy for you and again I will be explaining them later in the video question number two when do I have to pay sales tax and who pays it is it me the drop shipper or is it both of us the answer to this depends on whether you or the drop shipper have what is called Nexus and a state Nexus is a legal term which specifies that you have a physical presence in a state big enough to warrant having to collect and pay sales tax with a net and there are some obvious ways that you