Ask HN: Does a Canadian online retailer have to pay US taxes on US sales?
I just started working with a small Canadian online retailer that has always done the majority of their business in Canada.
US sales have been considered sales and included in income on the Canadian taxes and a US tax return has never been filed.
As we grow the business in the States, do we have US tax liability even if we don't have a physical presence? Do we have to collect US sales tax? Pay US income taxes? Does this change if we open a warehouse in the states? I would hate to invest my effort in this and find out that we owe a bunch of back taxes. Any information is greatly appreciated.
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Possible but unlikely; talk to an accountant. It will depend on a variety of facts which are difficult to assess from your post.
Do we have to collect US sales tax?
If you have a nexus (physical connection) in a US state, you may be required to collect and remit sales tax. Historically, it would be pretty easy to judge that you don't have a nexus. However, states are starting to become more expansive in their definition of what would create one. You may need to talk to an accountant.
Opening a warehouse in the US will almost certainly result in you having a nexus in the US state in which you open the warehouse, which will result in an obligation to collect and remit taxes for that state.
Edit: I should clarify: I am assuming that you operate entirely in Canada (and Canadian owned), and ship the goods into the US via postal service/ups/fedex/etc.