What is the name of your state?State of Business: California
Hi, I am from California, just so you guys know what sets of laws we are dealing with. I recently started up an internet website that operates like this:
1. We obtain the rights to sell products online through our website for a company that keeps the products in stock at their own warehouse. They agree to a contract we send them that designates us as a sales representative for their company, which explicitly says our sole job is to solicit orders (I can show you this contract if necessary)
2. We list their products on our website for sale, but it is clear that we are not the company holding inventory, it is the "featured store" or the company we have a partnership with that is holding the inventory.
3. We accept an order from a customer. Our company does business mainly in the united states with some international orders
4. We e-mail the order to our partnered store/supplier and they ship the item direct to the customer (your basic drop-shipping arrangement). We never take physical possession of any products.
5. The customer receives the item and is happy. Repeat the process.
My business is currently incorporated as an S-Corp. We do not have a business license, reseller license, and do not charge taxes at this time. Are the suppliers that are drop-shipping the product for us supposed to be charging us a tax on every order because we do not have a reseller permit on file with them, or are we both exempt from those taxes because we are setup as a sales representative of the company?
I have a nagging feeling that somebody somewhere is supposed to be paying taxes on these sales, and I want to make any necessary changes before it is too late. To sum it up, here are my basic questions:
1. Do I need a reseller's permit?
2. Do I need to charge taxes on orders from California customers (in-state sales)?
3. Do I need a business license even though we are incorporated?
4. Are my suppliers supposed to be charging me taxes on all of my current orders?