I’m not super familiar with taxation setup with a starting business. I’m based off in Canada and target market is both North and South America to begin with. Is this a manual process we have to go through or we will receive something like a notification when sales hit certain mark?
When will be the most practical time and ways to proceed with tax setup and filling in terms of business?
Hey there! Thanks for your question!
Here’s a breakdown:
Canada (your home market):
As a Canadian business, you’ll need to register for GST/HST once you surpass $30,000 CAD in annual revenue. Once registered, you collect GST/HST on sales across Canada. Some provinces also have their own provincial sales taxes (PST/QST) with separate registration requirements. Shopify provides Canadian Liability Insights directly in your tax settings that show how close you are to the threshold and prompt you to take action — so you don’t have to track it manually.
United States:
For US sales, each state has its own economic nexus thresholds (typically $100,000 in sales or 200 transactions in a state). If you use Shopify Tax as your tax service, you’ll get liability notifications when you’re approaching or have exceeded these thresholds in each state. You’ll see this in Settings → Taxes and duties → United States, and you’ll also receive notifications in your notification center as you approach 80% of a state’s threshold. So it’s not entirely manual — Shopify helps you know when and where you need to start collecting.
South America:
Tax obligations for South American countries vary widely and Shopify Tax doesn’t currently cover these regions. You’ll want to research the specific requirements for each country you’re selling to, or consult with a tax professional familiar with those markets.
When to set up tax collection:
Right away for Canada if you expect to hit $30K CAD in revenue soon (or already have). Many merchants register early to stay compliant from the start.
For the US, you can monitor your liability insights in Shopify and start collecting in each state as you approach the thresholds. Shopify will notify you if you use Shopify Tax.
Here are some resources to get started:
Setting up taxes in Shopify
Choosing a tax service
Understanding tax liability
Hope that helps, feel free to ask follow-up questions!