Is navigating state sales tax laws a lengthy process?

Bobkimballart
Visitor
1 0 0

I'm getting the idea that if I have to go through the sales tax laws of all 50 states and and their government agencies which could add up to 150 different phone calls, that it will take months to do all this. Am I right? I was thinking about switching to shopify, but if that what it takes, then no way for me. 

Replies 2 (2)

Holly
Shopify Staff (Retired)
687 74 154

Hi @Bobkimballart .

 

Great to hear that you are considering the switch over to Shopify.

 

I'd like to ease your mind when it comes to sales taxes to be charged per order. While tax laws and regulations are quite complex and varying depending on the state, Shopify is designed to automatically handle most common sales tax calculations for you. By using default rates, you can rest assured that Shopify will update them regularly. 

 

With that being said, during the set up of your online store, you will be selecting the countries/zones where you will be shipping your products. As such, you will be prompted to set up the sales taxes for those regions should they apply to you. Since you are located in the United States you will be faced with two set up options depending on which state you are running your business from and their respective local tax laws:

 

  • Registration-based taxes: Shopify will allow you to set up the regions where you are registered to collect taxes
  • Location-based taxes: Shopify will automatically calculate taxes based on the destination of the order itself

You do not need to contact the governing body of each state to determine what to do for orders going to their location. You will simply need to contact a local tax expert to determine what kind of taxes you are expected to remit based on your location. The above options have a link to our guide for set up purposes - something you can access when you have more clarity on the type of tax region your business resides within.

 

I hope this helps. If you have any other questions, please don't hesitate to ask.

 

Cheers!

Holly | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

KP_Enterprises
Explorer
60 2 16

Whether or not you are required to collect sales taxes is determined by Nexus in each state. Determining physical and/or economic nexus would be the place to start, if you haven't already. Economic nexus is based on your sales volume and the state threshold. You may not need to be collecting in every state.