sales tax

sales tax

mayya2
Visitor
1 0 0

I am setting up my store and will be selling in the US. In most states, if you initially make less than $100,000, you do not need to charge the sales tax. Can someone please advise how to set this up in my Shopify store? When a customer checks out, they need to see a $0 sales tax added. I am not sure how to do it. I messaged Shopify but they only advised how to completely remove the sales out at check out. The thing is that you still need to show it but it'll be $0 until you exceed your sales and then you need to start charging it. 

Reply 1 (1)

BreezyFile
Shopify Partner
31 1 2

Hey Maaya2, 

I work for a sales tax filing app built specifically for Shopify merchants so I could probably help answer this.

 

Your question about $100,000 in sales is a good question.  I think you are likely referring to economic nexus thresholds and it's possible that your state sets a specific threshold for needing to register once you have $100,000 in sales in a specific time frame.  Many states use that $100,000 (or 100 sales) threshold.

 

However, your main obligation is to charge tax when you ship to a state where you have nexus. To start, that means anywhere you have a physical presence.  So those threshold you are referring to really come into play after you start making sales.  But in the beginning, your business will be required to register for a sales tax permit in any state that you have an employee, including yourself, a warehouse, a storefront, inventory, etc.  Usually, that'll just be one state to start.

 


So if you are physically located in the US and in a state other than New Hampshire, Oregon, Montana, Alaska, or Delaware (these states don't have sales tax), then your business would be obligated to register in that state and then begin collecting tax when you ship orders to that state.  When you ship to other states, you do not need to charge tax until you either establish a physical presence in that state, or cross the economic nexus threshold set by that state.

 

In order to register for your sales tax permit, you can visit your state's department of revenue, taxation, or the equivalent department and it should be pretty straightforward on filling out the form to get your permit.  My business does also help with this if you need, but I am trying to not self-promote here and I wouldn't recommend paying for someone else to do it as you get started unless you would really like the help.

 

Once you are registered, the state will send you information on how often they'd like you to file (usually annually or quarterly to start).  Then they will let you know when your first filing will be due.  Shopify provides you with both calculations when necessary (if set up properly) and reporting to make this process smooth, but again, you can hire a filing service like ours if you need. There are several others out in the marketplace and they all seem generally, pretty good in various ways.

 

To set up your state as taxable, once you have your permit go to your Shopify settings (settings -> Taxes and Duties -> United States -> Add Region -> Your State). You can test to make sure this is working by just putting something in your cart on your website and go to the checkout. Then put an Indiana address in the shipping part of your page and you should see estimated tax appear in the total. If you see that, you’re good to go and Shopify will be properly taxing when you ship to IN. Additionally, put in a non-IN address and you should not see any estimated tax.

 

Happy to help if you run into further issues. Best of luck as you get up and running.

matt@breezyfile.com