Does Shopify track my sales is states where I dont have physical nexus(which is NJ), to determine if I am approaching the criteria for economic nexus? or is this something that I need to track on my own?
appreciate any guidance/commetns
Hey @DogonCaddy ,
Great question!
Shopify does not track your sales tax obligations for you, so you will need to track your sales in states where you have nexus (a connection that triggers a sales tax obligation) on your own.
Economic nexus is a term used to describe a threshold of sales or transactions that, when exceeded, creates a sales tax collection obligation in a state, even if the business doesn’t have a physical presence in the state. Economic nexus laws vary from state to state, so it’s important to understand the specific requirements for each state in which you have nexus.
To determine if you are approaching the criteria for economic nexus in a state, you would need to track your sales and transactions in that state, and compare them to the economic nexus threshold for that state. You can use Shopify’s built-in sales reports to track your sales by state, but you will need to do some additional work to ensure that you are meeting your sales tax obligations in states where you have nexus.
It’s recommended to consult a tax professional to assist with compliance and compliance can be a bit tricky based on the state, but if you want to take care on your own, you should stay up to date with the rules and regulations in each state, and work with a sales tax compliance software to automate the process of collecting and remitting sales tax.
Although we aren’t tax experts and aren’t able to provide tax advice, we do have some guides that you can read. Feel free to take a closer look at them below:
While Shopify doesn’t remit or file your taxes for you, we’ve recently launched a new feature called Shopify Tax, to help US merchants improve the accuracy of their tax calculations for local customers. If you’re a new merchant, then this feature will have already been added to your store automatically, so I recommend going through our help guide here to familiarise yourself with the functionalities that Shopify Tax currently offers.
Moira- thank you very much for your response. very helpful.
Great to hear @DogonCaddy !
Don’t hesitate to reach back out if you require any further assistance as you continue to work on your store.
All the best,