Let us be your guides
Calling all international eCommerce business owners! At fulfilmentcrowd, we want to give you the edge wherever possible. So when it comes to understanding more about what is needed to start selling your products, as well as outsourcing your fulfilment, in the USA, it can be a bit of a struggle. Alas, you have no need to worry as this blog will guide you into how you can expand into the USA.
Let's start by demystifying the tax process in the USA, so you can sleep soundly and dream about your next international expansion.
What is Economic Nexus?
With a name like Economic Nexus, it doesn't exactly scream: "Read me please!" Nonetheless, this is an incredibly important factor to consider before moving your e-tailer store to the states. The Economic Nexus ultimately means that when you have a sales presence within a particular state, this will then spark the obligation for you to collect sales tax from your customers at the point of sale. The 'Nexus' was introduced in the summer of 2018 and has now changed the game for international eCommerce businesses, like yourselves, when selling products into the US.
'When and where am I liable for Economic Nexus?'
To answer the 'where' question first, you are only liable in the state that which you store your goods in. Using our fulfilmentcrowd warehouse in Virginia as an example, since you are an international seller who is wanting to store your products in our Richmond warehouse, you must comply with the sales tax laws in Virginia. This means that you will be liable to both collect and remit sales tax where applicable and in line with the Virginian sales tax laws.
Furthermore, you are only liable for Economic Nexus if and when you make over a certain threshold of taxable sales in certain states. This threshold in the state of New York, for instance, is $500,000. So, if you are trading with your consumer base that is predominantly focussed in New York and you exceed the $500,000 threshold of taxable sales, then you will not need to have an individual tax code for each state that you trade within.
Tell me how to get started!
Registering as a foreign corporation:
The great news about this is that when you move your stock to the US, you do not have to register your eCommerce business as a US-incorporated company. Trust us, the process of this is both time consuming and expensive! In order to gain your license to trade, all you need to do is register your eCommerce business as a foreign corporation with a state authority. How do you do this? To register your business in the state of Virginia (yep, we're using our Richmond warehouse to exemplify this), then you must file and application for a Certificate of Registration with the Virginia State Corporation Commission.
How to pay your taxes in the US:
To keep this short and sweet, you will simply need to acquire a Federal Tax ID number (otherwise known as an EIN). This is a code that every business is required to have in the US. The federal government will issue this unique number to your company, which is then used by the Internal Revenue Service (IRN - so many abbreviations!) so to identify businesses for tax purposes easily and quickly.
Once your business has subsequently been registered as a foreign corporation, you can then apply for your EIN code.
Why the USA?
The United States of America: The land of the free and the home of the second largest eCommerce market. It is plain to see that no other country loves online shopping as much as the USA as it leads the Western world in eCommerce sales year on year. This in turn presents an incredible opportunity to take your eCommerce business to the next level.
Not only will you be a part of this huge international eCommerce marketplace, but gaining a presence in the US by outsourcing your fulfilment needs to our warehouse in Virginia, you are ultimately much closer to you US-based customers, thus saving you coin on shipping as well as shortening otherwise prolonged delivery times.
So, why let this pass you by? Don't have to throw away your shot by allowing overcomplicated tax jargon to deter you. With our blog today, you've learned all the roads you need to travel down in order to get set to go stateside! Now you can go to our Locations page over on our fulfilmentcrowd site to discover our USA fulfilment centres, as well as our entire global network of fulfilment centres. Explore to your hearts content - we're here for you to help you scale and grow!