Taxes

abeadaboveco
New Member
3 0 0

Hi there, 

I am very new to shopify and running a business. What does shopify do with the taxes they collect? What am I responsible for when filing state sales tax? I guess I'm just really lost on the tax portion of all of this. I live in Texas, not sure if that helps. I guess what I'm trying to find out is why do I pay the state when shopify takes out taxes and what does shopify do with that money? 

Thanks

Amanda 

0 Likes
Shaork
New Member
1 0 0

Hi there,

I have some taxes questions as well. I live in Taiwan and my questions are:

- Are income tax and sales tax all I have to deal with? And I need to pay both of them to my government?

- Do I have to fly to USA in order to have EIN or anything if I want to do business with US customers?

Thanks

 

Shao

0 Likes
Victor
Shopify Staff
Shopify Staff
770 66 191

Hi @abeadaboveco,

Thank you for reaching out with your question! Learning about your tax responsibilities can be a daunting task, especially when getting started, but I'll do my best to answer the questions you've posed and I will provide some resources that I believe will help.

Shopify does not collect or pay any taxes on your behalf. If you charge taxes on your products, this amount be will be processed and paid out to you by your payment gateway along with the cost of the product and any shipping charges the customer is due to pay. Neither Shopify nor your payment gateway will keep or reserve the sales tax on any order.

Furthermore, Shopify cannot inform merchants of their tax obligations, and we encourage all merchants to do their own research and learn their obligations before launching their store. There are, however, a wide variety of resources you can make use of to better learn what taxes you need to collect from customers and pay to tax authorities. As a general rule, merchants only need to collect and remit sales taxes from states where they have a tax nexus—this means if you and your business are based in Texas and you have no other presence in other states, such as a warehouse or office, then you will likely only need to charge customers in Texas sales tax on their orders. I would recommend checking out our documentation on setting up US taxes and US tax references for further information.

I would also suggest checking out a website called TaxJar, which has lots of information about sales taxes in the US in their blog. I think you'll find their blog post on tax nexuses helpful, and they also have a dedicated state-by-state section with numerous blogs and articles—you can find the Texas section here. If after doing your research you are still unsure of what your tax obligations are, I would suggest reaching out to a tax professional who can provide you with detailed and reliable advice.

I hope this information is of use to you but please let me know if you have further questions.

Kind regards,

Victor | Shopify Social Care

 

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

0 Likes
Victor
Shopify Staff
Shopify Staff
770 66 191

Hi @Shaork,

Thank you for getting in touch with your questions. I do not believe that you will need to apply for an EIN if your business is not based in the United States, but this is something you will want to look into. You can read the IRS's guidelines on EINs here.

In terms of your responsibilities in paying taxes in Taiwan, this is something you will need to research and look into. The Taiwanese government should provide some information that can help you, plus there are third-party blogs and websites that offer advice such as this one. If you are still unsure, I would recommend contacting a tax professional to better understand your tax obligations.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

0 Likes
daisukedaisuke
New Member
1 0 0

Dear Victor,

I am also not living in the USA but planning to sell to USA customers.

I have read several articles online about Economic Nexus and I am aware that once I reach a certain amount of sales/number of transactions with a particular state, I will need to file an application to that state.

 

My questions are as follows:

1. Since I am just planning to start my Shopify business this month, do I need to start charging my customers now for the sales tax?

2. If the answer is yes in my first question, what if my sales this year does not meet 200,000 USD (I understand that this is the condition for most of the states where I will need to register my business)? Where should I give the money that the customers pay me as a sales tax?

 

Hoping for your response.


Thank you.

0 Likes
Victor
Shopify Staff
Shopify Staff
770 66 191

Hi @daisukedaisuke,

If you are not living in the USA and do not have any tax nexuses in any of its states—e.g. a warehouse or office—then you likely will not need to register to pay sales taxes there, nor will you need to charge sales taxes to your customers. However, as you referenced, some states do require you to pay sales taxes if you meet a certain revenue or order threshold even though you may not have a physical presence there. I'd recommend checking out this blog post on TaxJar.com that provides a breakdown of these thresholds on a state-by-state basis.

If you are just starting out and have no physical presence in the USA, then you will likely not need to charge your US-based customers any sales tax as you are not required to pay it. However, this is not something Shopify can confirm for you and I would recommend contacting a tax professional if you are unsure of your obligations. If you do meet a tax threshold for a state and are required to start paying sales taxes, you would need to register with the local tax authority for the state and pay them as required.remit your taxes as required.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

0 Likes