I'm currently based in Canada and selling on Etsy's Marketplace and I wanted to check out other options, like Shopify. My main concern about moving platforms was the process of collecting sales taxes because with Etsy they collect and remit sales taxes on our behalf, so sellers don't need to do anything. However when I looked online most of the articles I found said collecting sales taxes on US orders aren't required if you don't have a physical/Nexus location in that State.
So my question is... As a Canadian shop, if I started using Shopify do I need to start collecting sales taxes on US and International orders? Or do I leave that setting turned off?
Thanks in advance!
In Canada regardless of what platform you use your business must charge international companies or customers the Harmonized Sales Tax and remit to CRA. Companies within Canada that pay such a sales tax can make a claim to have that sales tax credited back at the end of their tax year.
Wrong, so Wrong
Directly from CRA: As a general rule, goods that are exported outside of Canada and services rendered to non-residents are zero-rated under the GST/HST rules. This means that they're technically taxable, but at a rate of 0%, you don't have to charge anything.
After the SCOTUS Wayfair decision, you need to collect US state taxes after a certain threshold, but you don't need to worry about it until you hit a certain volume, Usually 100,000 and up in sales or 200 transactions for the given state. Each state is different, but most have a similar threshold. There are Shopify Apps that handle US taxation, as with cities, towns and counties adding there own tax rate to the state tax rate, you have over 10,000 tax jurisdictions in the USA.
You're technically correct it's 0% rated but not always. In regards to what OP mentioned if you don't reside or operate your business in U.S. then you don't have to worry about U.S. sales tax.
@Jessica101 Simply setup your Canadian taxes in Shopify and taxes should be calculated automatically on your checkout page.
Here's a really easy way to setup Canadian taxes in Shopify: https://help.shopify.com/en/manual/taxes/canada