Shopify Sales Tax
Get to know Shopify sales tax basics
Many business owners sell their goods through Shopify because this platform is so large, has a wide customer base and is easy for shoppers to use. Shopify simplifies many tasks for sellers, but it doesn’t automate them — sellers still must pay taxes in the correct amounts and on time. Failure to do so can result in fees, fines and penalties. This trips up many business owners who use Shopify, since other platforms such as Amazon DO pay the taxes for sellers. We provide Shopify sales tax and reporting solutions for our customers.
Sales Tax Overview
Some online platforms used for selling products are considered Marketplace Facilitators. This means that the platform is responsible for collecting and remitting sales tax. This removes the responsibility to collect and remit sales tax as a seller on those platforms. Shopify is not considered a Marketplace Facilitator, so the sellers on this platform are responsible for collecting and remitting sales tax.
Shopify does not file or remit sales taxes for you. The platform does not handle tax collection or the tax settings for sellers. Before enabling tax collection for your online store, it is important to evaluate where you have sales tax nexus and whether your products are taxable in those jurisdictions.
Steps to Collecting Sales Tax on Shopify
- Complete a thorough sales tax nexus review for both physical nexus and economic nexus.
- Register necessary sales tax account.
- Obtain sales tax certificates.
- Enable sales tax collection on all required platforms for the registered jurisdictions.
- File sales tax returns and maintain sales tax account.
Sales Tax Collection
Follow the links for more detailed information:
- If you are running an online store, then set up the countries you will be shipping to.
- If you are using Shopify POS to sell in person, then set up the tax rates based on your retail locations. The default POS tax rates are based on the geographic location in which you’re in-person sales take place.
- Set up the tax rates in the countries and regions to which you will be selling and shipping your products:
- If you are in the United States, Canada, the European Union, the United Kingdom, Norway, Switzerland, Australia, or New Zealand, which use registration-based taxes, then enter your tax registrations to collect tax.
- If you are in a region that uses location-based taxes, then use the default values or specify the rates for countries and their regions. In addition, specify whether you will charge taxes on shipping.
- If you sell digital products, then set up the taxes that apply to these items.
- Override tax rates or exempt products from taxes where necessary. Any overrides that you set apply to online sales and to Shopify POS sales.
- Optional: Include taxes in all your product prices. When this option is enabled, no additional charge for taxes is added to a customer’s checkout. Instead, a calculation is done to determine what percentage of a product’s price is tax.
As you set up taxes, you can access and review your settings on the Taxes and duties page in your Shopify admin.
Shopify & Economic Nexus
Nexus determination is one of the most complex and worrisome aspects of running an e-commerce site. You must determine how much to charge in taxes for each customer’s jurisdiction, and you must collect and pay these taxes on time. The fact that Shopify sales tax software determines your business’s economic nexus for you and collects the appropriate amount of sales tax on your behalf is a great benefit of using this platform.
However, while you are legally required to collect and pay taxes on sales in other states, it is illegal to collect these taxes without first completing a sales tax registration in that state. Our sales tax firm can register your company for you in each state in which you do business.
Shopify’s sales tax collecting, and reporting rules can differ from those of other platforms such as Etsy — do not take chances. Rely on our sales tax firm to ensure you are in compliance with tax laws with regard to your sales on Shopify.
Sales Tax Reports
The Taxes finance report can provide a summary of the sales taxes that were applied to your sales.
The Sales finance report can help with your sales tax reporting. You can export this report as a CSV file that includes the order amounts, taxes, POS, billing, and shipping locations. To make the most of this report, make sure you choose the correct time period (such as the calendar year), and select Full report when you export it. This report helps you get the information that you or your accountant will need to work on your sales tax returns.
To learn more about these reports, refer to Taxes finance report and Sales finance report.
Shopify Tax Documents Available
Too many business owners — especially those new to the game — do not give the proper attention to paying taxes. It is a big mistake and can be costly. Our Shopify sales tax solutions can make paying your taxes easy. The platform provides sellers with handy Shopify tax documents that show you how much the site has collected in taxes on your behalf for each of your sales. This is a tremendous help when you are filing and paying taxes, as each sale does not have to be calculated manually.
Shopify Sales Tax Payments Made Easy
Too many business owners — especially those new to the game Some sellers make the mistake of assuming that because Shopify does not file or pay taxes on behalf of sellers, that they do not report to the IRS (Internal Revenue Service). This is incorrect. Shopify reports all sales to the IRS. Therefore, if you do not pay the correct taxes on time, the IRS will know. You will eventually have to pay the taxes, and fines and penalties as well. That is why it is a good idea to have us set up a Shopify tax reporting and filing system for you — to ensure your taxes are paid on time and in full. Whether you file your taxes annually, quarterly, or monthly, the digital tax solution can be customized to your needs.
Outsource Your Tax Preparation to Us
You didn’t launch your business to file taxes. Or to learn about the tax laws in your country, to rationalize the right invoices, to keep organized records for years and years. No, that part of your business is actually an undesirable by-product. That’s why we created Sales Tax solutions.
Hand over all your concerns about tax compliance, and tax filing issues. And in return, you’ll get: Way more time to focus on growing your business and making your customers happy
Really, there’s no reason for you to stress over online retailer’s sales tax when they can be synchronized by a friendly, compatible team of tax consultants.
Let Sales Tax Solutions take care of the tough stuff!
Be aware of the filing deadline
All you need to do is tell us where your Shopify business is based. From this, and the sales tax information in your orders, Sales Tax solutions can give you specific filing deadlines.
Synchronizing your sales and order history
Once you link your Shopify store, we’ll pull in all of your order and sales history from the beginning of the year until today. Additionally, we also identify and break out sales tax info.
Prepare Tax Returns in Minutes
Through our synchronized efforts, we tabulate online store sales tax from every jurisdiction, whether it’s state, city, country, regional – we got you covered. We even provide summary information in a report that matches the forms on the state web site. We make Filing and remitting sales tax for your Shopify literally a breeze.
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