I just recently opened my shop last week and I have had one sale so far. The customer was a Texas resident so taxes did apply since I am based in Texas. I only have the online store, no physical location. I work from my home. I noticed that it charged my customer a 6.25% state tax and a 2% city tax. I do not remember being told that I had to pay city tax. Can anyone please help my understand this better? Do I have to pay city tax to someone? This tax stuff is way over my head, any advice would be appreciated. I am also looking into getting a tax professional locally to assist me in the future.
Thanks for getting in touch with your question! Taxes in general are rather confusing and can be daunting to figure out, and I would always recommend speaking to a tax professional if you're unsure of your responsibilities. However, I'd be happy to offer some general information here as well that I hope will be of some use to you.
If you're based in the USA, you'll likely need to charge and remit sales taxes in any state where you have a tax nexus. As you are based in Texas you likely have a tax nexus there, even if you work from home, although this is something a local tax professional will be able to confirm. If this is indeed the case, you will need to register for a sales tax permit for the state of Texas. I'd recommend checking out this useful guide on the TaxJar blog which covers this in more detail, along their general Texas sales tax guide.
Texas is an origin-based tax state, meaning the county and municipal/ city taxes are based on your own location and not the buyer's within the state. Once you've registered for a Texas sales tax permit, you'll be able to pay and remit the sales taxes you've collected from Texan customers on your Shopify store.
Victor | Shopify Social Care