Mohammad Hossain, CPA, CGA

Question Answer
1 Can I sell products to any geographical location? Yes
 2 Do I need to create a corporation? Not necessary
3 If I want to create a corporation then should it be a federal corporation or a provincial corporation? It does not matter much. If you are a Federal corporation ,still you need to register for an extra-provincial corporation for the province you will operate.
 4 Do I need to charge sales tax if I sell within my province?  There is a small business threshold. Simply speaking, if your sale crosses $30,000 in a year then you have to charge sales tax on your sales. You are responsible to know at which point your sale will cross this threshold. If this business is a side gig and you are pretty sure that the total sale will never cross $30,000 then you may ignore registering for HST. However, if this is your main business and you are serious about future growth then better to register ahead of reaching this threshold.
 5  Do I need to charge sales tax if I sell within Canada? The $30,000 threshold rule applies here also.
 6  What should I do if I sell in other provinces in Canada? If you sell your product in British Columbia, Northwest Territories, Nunavut and Yukon, then you have to register for collecting provincial sales tax (PST) (also known as retail sales tax, RTS) in each of these provinces separately. The Ministry of Finance in each province deals with PST. If you sell in the provinces other than the above provinces then your HST registration will work well.
 7  Should I charge at the same sales tax rate in each province? Not really. You have to be very careful in setting the sales tax rate for each province. Due to political reasons, the rate might change over the course of time. I’m sharing a useful link below which provides an updated sales tax rate.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate/calculator.html

 8 Do I need to charge sales tax if I sell in the USA? The basic rule is you’ll collect sales tax from your customers in a US state if your business has a sales tax nexus in the same state as your customer; and the product you are selling is taxable in that state.
 9 What is a sales tax nexus? Simply speaking “sales tax nexus” refers to “significant connection”. You may have a significant connection with a US state but not with the other. Sales tax nexus can be established using different factors like location (if you have office in that state), personnel (if you have an employee or salesperson in that state), inventory (if you store inventory in that state), etc.
 10 Where could I find a detailed sales tax nexus of each US state? Following link would be helpful in finding detailed sales tax nexus by US states.

https://www.bigcommerce.com/blog/ecommerce-sales-tax/#undefined

 11 What should I do if I know that I have to collect sales taxes in a US state? You have to register for a Sales Tax Permit in the state where you’ll sell your product and collect sales taxes. Following link is useful to find how to register for a sales tax permit in every state. Note that when you’ll receive the sales tax permit, you’ll also receive the information about the filing frequency (monthly, quarterly, annually).

https://www.taxjar.com/sales-tax/permits

 

 12 At what rate should I collect the sales tax for USA sales?  First, you need to know whether the state follows an ‘origin-based” or the “destination-based” rule. Origin-based rule directs sellers to charge sales tax at the rate of their business location. On the other hand, by destination-based rule, the sellers charge sales tax at the customer’s ship to address. It is a daunting task to find which state follows what type of tax sourcing.
 13 Do I need to charge sales tax if I sell in the UK and EU? It depends on the specific European country’s sales tax regime. The discussion will be very long. So, I am sharing a very useful link so that you can go by a specific country’s tax rule.

https://www.avalara.com/vatlive/en/country-guides/europe.html

 14 If my Canada sales is $10,000 and overseas sales is $25,000 in a year, then do I need to register for GST/HST and collect sales tax? Yes. The $30,000 threshold is applicable for worldwide sales