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As with any other ventures, dropshippers are obligated to pay taxes to stay in the legal field. The failure to meet tax-related requirements results in legal consequences, like fines, lawsuits and eventually stopping your shop operations entirely. To avoid that, you need to clarify for yourself the relationship between dropshipping and taxes. Many people perceive taxation as such a complicated and tangled matter, that they do not risk creating their venture, being afraid, that they fail to keep up with the multitude of requirements. But actually, no need to worry. With dropshipping, understanding and fulfilling the tax requirements is easier than with many other forms of business. Below we will explain the basics of dropshipping taxes and then go into some specifics of paying them in various regions of the world.
In general, there is a short answer on the question, do dropshippers pay taxes or not. The majority of stores need to deal two main types of taxes. The income tax is defined based on the profit your business gained within a year. It is probably already familiar to you. If you are employed at some organization and receive your salary there, you pay some percentage of it as your income tax. The sales taxes for dropshipping are determined the same way, based on the total cost of everything you have sold. Along with the described taxes, you may also face some other obligatory payments, for example, custom duties, if you sell your product abroad.
The specifics of paying various types of taxes depend on your residence country, and sometimes it even can vary from region to region. Let’s describe these differences. Dropshipping involves two kinds of legal relationships: first your order some goods from your supplier and then…
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