Tips for Print on Demand Taxes [2024]
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Tips for Print on Demand Taxes

Last modified: January 17, 2024

Tips for Print on Demand Taxes
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When you start to sell on Shopify across the world, it can be hard to get to grips with all the rules that there are. Print on demand taxes, for instance, can be very hard to understand. So here is a quick guide to help you out navigate your POD business.

Key Takeaways
1
Sales Tax is charged at the final purchase stage in the US, while VAT is added in the EU and UK.
2
E-commerce has complicated tax collection; businesses now collect taxes instead of direct government payment.
3
Shopify’s system helps calculate the correct sales tax/VAT, with options for manual updates and exemptions.
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Sales Tax and VAT

The simple sales to start with is the ‘Sales Tax’. This is the name for the tax that is applied to products/services being sold in the US. In the EU and UK, the tax is named VAT (Value Added Tax). Some nations will name these Goods and Services Tax or GST.

The main difference between the Sales and VAT taxes is that the sales tax is charged at the final, purchasing stage. VAT, on the other hand, is imposed on every step of production.

The taxes used to be very simple. You would pay the appropriate rate of tax from where you’re based. However, with e-commerce, this is now becoming very challenging. Another more complicated element is that shoppers don’t pay for the sales tax directly to the governments anymore, it is collected by the businesses and then paid to the government.

Note that it doesn’t matter what you are selling. Dog clothes and Fleece blankets were all created equal.,

US Sales Tax

When it comes to US Sales tax, there is a historic note of what is called ‘sales tax nexus’. This has been, for decades, what essentially meant where you have a physical presence. So if you had a single office in Washington, you would pay the sales tax for that area.

However, since 2018, this has changed. Instead, now the tax is applied if a business starts to sell more than 200 units or generates more than $100,000 in sales in any given state. So you could sell 200 units at $1 each that would mean you would have to pay sales tax in the state, even though you’ve only earned $200.

EU/UK VAT

In regard to VAT, this is much different. You need to pay VAT if you’ve got a UK or EU billing address. This is regardless of where your customer is based. So if you’re based in London and selling to customers in the US, then you have to pay VAT.

There is a slight difference here. In the UK, you are allowed a certain amount of sales before you have to register for VAT. This figure increases every year slightly, so always check with the latest government information whether you’re past the threshold.

Good News for the Shop Owners

However, there is some good news if you’re worried about how you’re going to calculate all that tax. Firstly, there are features within the Shopify system that allows you to have the correct and right sales tax/VAT added to the shop.

The Shopify system also has the default rights, which are updated when required. However, you can update and override the default options yourself if needed.

You should also check that you don’t have products that are exempt from VAT. For instance, in the UK, children’s clothes are exempt from VAT. However, in the US, many food products that are to be consumed off-premises are exempt for tax.

Keep Reading

Conclusion: Tips for Print on Demand Taxes

If you’re worried about Print on Demand taxes, you don’t need to be. Shopify is a good system that can help you manage this. There are also accounting apps and Shopify tax apps that can help you manage your taxes with ease.

FAQs
  • Are there any tax advantages for print on demand businesses operating from home?

    Yes, there can be tax advantages for print-on-demand businesses operating from home. Home-based businesses often qualify for various tax deductions, including the home office deduction.

  • What records should I keep for my print on demand business’s tax purposes?

    Maintaining thorough records is essential for the tax purposes of your POD business. To ensure proper tax compliance and maximize deductions, document various aspects of your business operations.

  • Can I use a single tax rate for all my print on demand sales?

    The tax rate for your POD sales may not be a one-size-fits-all approach. Tax rates can vary based on various factors, including your location, customers’, the type of products, and applicable tax laws.

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