I have a quick question. I have a sellers permit only in California. I sell all around the world. Should I be only charging California customers taxes or all states? Please help!
How am I supposed to collect the taxes that I take from them and pay back the government? Sorry newbie here.
Julie here from Shopify Support.
It's great to see that you're working on setting up your taxes. Luckily, Shopify has the ability to offer automatic tax calculations, so you can be sure that you're charging customers the correct sales tax.
When you registered your business with the state of California, did you also get a sales ID? If so, you can add your sales ID in Shopify, over in Settings > Taxes. There, you'll also be prompted to select California as the state you're registered in, meaning that taxes will be automatically calculated for customers based on California's current sales tax laws. We have instructions that will walk you through the process of setting up your tax settings here.
Once that's done, you'll see an option to Start collecting taxes. With this option selected, your customers will start seeing taxes added to their total cost once they reach the online checkout. Those tax rates will be automatically calculated based on your customers' state and California tax laws, so there's no need to worry about setting up specific tax rates for specific states.
While Shopify helps to automate charging sales taxes, Shopify doesn't remit or file your taxes for you. We do, however, offer tax reports to help you get the information that you or your accountant will need to work on your sales tax returns.
You will also receive a 1099-k if you have processed over $20,000 as well as 200 transactions through Shopify Payments. This form is generated by Shopify and will be provided to both you and the IRS. Just keep in mind that the 1099-k will only include transactions processed on Shopify Payments, so if you meet the requirements for a 1099-k form through a third-party payment provider (like PayPal), then that provider will be responsible for generating it for you.
If you need any further advice around how to file taxes, I strongly encourage you to get in touch with a local tax expert.
I hope this clears things up!