Good morning
My store sells mainly jewelry but also clothing and bags/purses.
At the moment I have tax included on (I think) all of my products, however I’m worried about making more of a loss than profit as taxes can differ in US states and worldwide.
Is it better to not have tax included? Or if anyone has taxes included in their store, how do you manage it so that you do not lose profit?
Thanks
Cheryl
Hey @Chez1981 ,
Whether you should include tax in the prices of your products depends on a number of factors, such as the laws in your region and your target market. In the United States, sales tax is typically collected at the state level, and the rules can vary widely from state to state. Some states require you to collect sales tax on all sales, while others have more complex rules that depend on factors such as the types of products you sell, the origin of the products, and the location of the customer.
In general, if you’re required to collect sales tax on a particular sale, it’s typically better to include the tax in the price of the product so that customers are not surprised by the additional cost at checkout. This can help to reduce cart abandonment and improve the customer experience.
If you’re not required to collect sales tax, it might make sense to exclude it from the price of the product so that you can offer a lower price and potentially increase sales.
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 onto your store automatically, so I recommend going through our help guide here to familiarise yourself with the functionalities that Shopify Tax currently offers.
As for how to manage it to not lose profit, You can also use some of the Shopify apps which will help you to automate your sales tax collection process, and make sure you’re collecting the right amount of tax for each sale based on the location of the customer and the products they’re buying.
Additionally, It might be helpful to familiarize yourself with the sales tax laws in the states where you do most of your business and keep track of any changes to those laws over time. Another thing that will help you is to keep your prices competitive and competitively priced that way your customers will be more willing to make a purchase with added tax.
Ultimately, the key to success with sales tax is to stay informed and take advantage of the tools and resources available to help you navigate the rules and regulations.
Let me know if I can clarify anything further,