Check Shopify Sales Tax Off Your To-do List With Our Super Digestible Guide

shopify sales tax

Introduction

Why Shopify?

What is Shopify?

Shopify Features

Shopify Pricing Plans
An online store using Shopify’s Symmetry theme

What is Shopify Sales Tax?

Shopify sales tax

How to Charge Sales Tax On Your Shopify Store?

#1 Tell Shopify Where to Collect Sales Tax

#2 Set Up Shopify Tax Calculations

  • All prices include tax
  • Include or exclude tax based on your customer’s country
  • Charge tax on shipping rates
  • Charge VAT on digital goods

#3 Set Up Tax Overrides

3.1 Create A Collection

  • From your Shopify admin, go to Products > Collections. Next, click on Create collection — the green button on the left.
  • Name your collection. Under Collection type, choose Manual.
  • Click Save to finish.

3.2 Create the override

  • Go to Settings, then navigate to Taxes > Tax overrides section.
  • There, click on Add product override.
  • Next, you need to select the collection you’ve just created and choose the region where the override applies.
  • To finish, enter the tax rate for the collection in that region.

3 Best Shopify Tax Apps in 2021

TaxJar

TaxJar Pricing Plans
  • Connect TaxJar to your Shopify online store
  • Prepare your Shopify sales tax report
  • View the report and AutoFile your sales tax forms
How TaxJar Works

Not having to file manually in 42 states, that’s where we save a lot of time. We save money by not having to hire a full-time sales tax person.

Vu Nguyen, Co-founder & COO of Beautylish.

Avalara TrustFile

  • Integrate with your Shopify online store and automatically apply different tax rates
  • Follow rate changes for every address with geospatial targeting
  • Track nexus and get alerts in each state with the interactive map
  • Export and create consolidated for sales tax liabilities and exemptions

Quaderno

Quaderno tax features are very valuable for us. As we grow, we are able to have more resources dedicated to control taxes, and Quaderno is very helpful — Ashley Sachs, Customer Support Manager at Whereby.

  • Quaderno integrates harmoniously with Shopify to collect your sales data in real time and begin automating your Shopify sales tax processes in a couple of mintues.
  • It automatically calculates the correct tax rate on every transaction based on the data provided by Shopify and issues a receipt for the sale that is customized to your brand, in the customer’s native language, and locally tax compliant in their country or region.
  • Quaderno provides all of your financial data in easy-to-read reports ready to share with your trusted tax advisor. So you can finish the quarter celebrating, not slaving over returns.

Shopify Sales Tax: Recaps

  • Shopify will handle your problem by an automatic sales tax calculation. You can also set up tax overrides to address unique tax laws and situations.
  • However, this eCommerce platform won’t help you file or remit your sales taxes.
  • You technically don’t own any sales tax you collect. Shopify sales tax is typically collected from shoppers, by the seller, and then passed on to that state.
  • TaxJar, Avalara TrustFile and Quaderno are the three most popular tax apps for Shopify. We recommend you start a free-trial with all these apps so that you can play around with them and make a well-informed decision.

FAQs about Shopify Sales Tax

  • Does Shopify charge sales tax?
  • Does Shopify report sales to IRS?
  • How much tax does Shopify charge?
  • Do I need a seller permit to sell on Shopify?

Bottom Line

In this world, nothing is certain but death and taxes.

Benjamin Franklin

--

--

--

Our Automated Shopping Cart Migration Service helps you move your online store to a better e-commerce platform with ease. Learn more at https://litextension.com

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Open Credit Enablement Network : Design and Guiding Principles

The Type of Innovation Your Company Needs

Millennials as customers: How digital natives are reshaping the way of doing business

Handshake awarded the ‘Excellence in Finance Companies’ award at FiNext Conference Dubai 2020.

Rockwell Automation Investment Report

Fund Inclusive Imagination

Amazon’s War Against Small Businesses

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
LitExtension

LitExtension

Our Automated Shopping Cart Migration Service helps you move your online store to a better e-commerce platform with ease. Learn more at https://litextension.com

More from Medium

Fortinet NSE 4 — FortiOS 7.0 NSE4_FGT-7.0 Questions and Answers

My own Container Management Tool:

Can we create a Scalable Electrified Aircraft?

Let’s Start with the Obit, 1989