If you are running an online business or doing products that are being delivered to customers your question may be do I have to pay sales tax if I sell online but Dropship?

This is a good question to ask as it affects your bottom line. It is a basic answer yet a complex one as well.

Most people and companies that sell online are buying products at wholesale prices. They in turn will see these products online out of their company name. This is usually done via a store source such as eBay or a similar site.

If you have a site such as this on eBay or a similar site you will use a Dropship company to order from. When a customer orders from you they will pay you for the product. They do not know that you are having the item drop shipped to them from another source.

When you receive payment from your customer you in turn go to the Dropship Company and order the product for your customer. You will then input the customer name and address to where the product will be shipped.

The Dropship Company will then send out the product with your company information on it.

Because you are ordering wholesale from the Dropship Company you will not be charged for the sales tax. A wholesaler pays for products tax free. So you might ask who pays the sales tax, is this illegal?

The answer is no, it is not illegal. Where the sales tax is covered is on the side of the company you use to Dropship. This company you use will pay the cost of sales tax. This is based on where the company is located.

For example, if the Dropship Company is based in Washington State then they will pay the regulated rates for taxes in Washington State. The same is true for other companies.

This is also true if you are in another country. A good Dropship company will tell you where they do business when you research them. They will convert currency and pay you or charge you accordingly based on their currency exchange of their location. A Dropship company will most likely always pay excise tax as well.

Many Dropship companies will also offer you to use their marketing and other information on your site for selling retail. You choose the amount of pricing that you wish to pursue. You however do not want to charge so much that you do not get customers.

The key in all of this is finding an excellent company to use for drop shipping. When you find a company that is reliable and dependable you can build and excellent source of income for yourself.

You can also be assured that taxes are being paid and you have a legitimate online resale business. Some will even provide you with your own merchant account so you can do credit card transactions on your site.

Just make sure that you have a company name. You will also want a resale license set up in your state. This is easy to obtain from your local governmental agency. Follow their guidelines and specifications when applying. Usually it can be achieved in one visit to the agency.