Collecting taxes as a new business

Collecting taxes as a new business

pokecmb
Tourist
6 0 2

Hi. I have a brand new website on Shopify and I’m wondering if I have to collect taxes and how I could pay them to the government. I am selling sealed Pokemon boxes and I live in Florida. If anyone could help me I would greatly appreciate it

Replies 2 (2)

TheEcommerceCFO
Visitor
2 0 0

Hi there. Each state has different rules. Typically if your revenue hits a certain amount, you need to start collecting and paying sales tax. If I were you, I would sync your shopify store to numeralhq.com. It is free, and will tell you if you need to pay sales tax. If you need to, they will manage the filing for very cheap rates. 

BreezyFile
Shopify Partner
56 1 9

Hey, I actually disagree a bit with the poster below. They’re right about there being thresholds, but there’s also a physical component to determining if you need to collect sales tax. This physical presence means your business is likely required to collect tax when you ship to FL since you’re physically located there.

You only need to collect sales tax if you’re shipping to a state where you have "nexus." Nexus is essentially when your business presence in a state is significant enough to require you to collect sales tax.

There are two ways to establish nexus:

  1. Physical Nexus: If you have a physical presence in a state (e.g., an office, warehouse, or employees), you’ll need to register to collect sales tax in that state and start collecting tax on shipments to that state. Since you mentioned you’re located in FL, you should collect tax on sales shipped to FL. To set this up, you can register with FL through the Florida Department of Revenue (FL DOR) website to obtain your sales tax license. Once you have your license, go to Settings -> Taxes and Duties -> United States in Shopify, scroll down, and make sure FL is turned on for sales tax calculations.

  2. Economic Nexus: You can also establish nexus if your sales into a state exceed its economic thresholds. These are generally a minimum of 100 transactions or $100,000 in sales into a state over a 12-month period. Once you exceed these thresholds, you’ll need to register for a sales tax license in that state and begin collecting sales tax.

Shopify makes tracking this easier under Settings -> Taxes and Duties -> United States -> Review Insights. You’ll also get notifications when you hit 80% of a threshold and again at 100%.

Once you’ve crossed a threshold, you’ll need to:

  • Register with the state and obtain a sales tax license.
  • Turn on tax calculations for that state in Shopify.
  • Remit the collected tax to the state when required.

Happy to answer any questions if you have them!

matt@breezyfile.com