I was having a panic attack because I was having order coming in and I didn't really understand how Shopify collect sales tax. So I had a mini freaked out because I thought my settings was wrong but everything was functioning correctly. Thank you so much for being knowledgeable and explain the threshold for me. That is really great that Shopify does all the leg work for you, I never knew that I don't have to collect everything I sell by 8% just because I'm in Texas.
Great video! I do have a few questions. First question does this new shopify sales tax act as a sales tax engine and should I download an app like TaxRex for sales tax filings? Second question I just started a Print on Demand Clothing brand and selling through Shopify I am based out of CA, am I only responsible to report taxes in CA since I'm an online store or do I have to get a sellers permit for every state that I sell too? Lastly, since I use a Print on Demand platform Printify to make my products they ship out from different locations that I won't know the addresses too I am still responsible to report those locations when I am using their services?
1) At this point, you still have to use a separate engine for sales tax filings. 2) You only need to collect and remit sales tax in states where you have economic or physical nexus. You can learn more by watching our free sales tax masterclass: ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax?TH-cam& 3) To be safe, you can get a list of all those locations and add them to your Shopify settings.
I love all your videos and the way you explain everything. Can you do a video of how to get the report from sale tax from the state you are charging taxes.
We've got channel-specific videos on how to do this in our sales tax courses. You can find those here: ledgergurus.thinkific.com/collections/sales-tax?TH-cam&
Hello! Why is it that other States charges so many different types of taxes? Is this normal? Or is this with Shopify Stores only? I had a client asking why was she charged for state and county at the same time and this has never happened with her orders on other stores (even for bigger businesses). I have a skincare brand and would definitely appreciate your help in understanding the taxes. Thank you! Another ex. I have a client that was charged the following taxes on 1 order: Illinois State Tax Cook County Tax Elk Grove Village City Tax Regional Transport Authority I think it's a lot and most of these are unfamiliar to me. My business is only based in Florida
Sales tax is different in every state. And depending on the state, you can be charged up to 4 levels of sales tax - state, county, local, special district. That is what you are seeing. It is not specific to Shopify. It's the law for any state. Those other businesses may not have their sales tax set up correctly. Also, FYI...you are only responsible for collecting in states where you have physical presence (like Florida) or where you have passed the economic nexus threshold. If you don't have nexus in one of these two ways, you don't need to collect sales tax. And by the way, it is illegal to collect sales tax where you have not registered for a permit. If you have, you either need to register and remit the sales tax or refund it to the customer. For more information on sales tax and how it works, as well as a chart that shows economic thresholds by state, download our 10 Steps to Ensure Sales Tax Doesn't Burn Down Your Ecommerce Business guide: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
So we don't need to worry about getting individual state tax ID numbers until we're getting close to hitting the threshold correct? And we don't need to pay taxes on anything before the thresholds?
I love that shopify is doing this! makes tracking so much easier! My question is, do I need a permit in the state of Illinois to begin collecting sales tax or is not required until I am about to meet that threshold, and how is there a software that can pay/remit those sales taxes for me?
If you have a physical presence in IL, then you need to register and start collecting. If you don't, then you don't need to do that until you pass the economic threshold. Here's another video on various sales tax software to choose from: th-cam.com/video/-DhtTN5_Rh4/w-d-xo.htmlsi=pf8vNfeJQM1HSluR
Hey so I’ve noticed that even cities and counties have different tax rate percentage in the same state. So I’m wondering how would I calculate a bunch of orders here in Florida when it’s time to remit since the rates are all different? Or does Shopify separate and calculate each taxes per order since the rates are different per city? Also when do you recommend remitting sales tax monthly or quarterly?
When you register for a permit, the state will tell you how often to remit. And you can see the amount of sales tax calculated for each order on your sales report. Here's how to read it: ledgergurus.com/shopify-sales-tax-report-how-to-find-understand-it/?TH-cam&
Excellent video...thank you for posting. I am trying to wrap my head around this so I would like to summarize my understanding with a question. I plan to sell a book (quantity 900) from my garage in southern California. Profits will not break $15,000. I understand that Shopify Tax will calculate sales, generate reports, and inform me when taxes need to be paid per state based on economic Nexus. I also understand that tax filing requirement is different state by state. With an established LLC, when will I know to file taxes? Does the Shopify Tax program inform me?
It should, but it would also be wise for you to be watching it yourself. I also encourage you to download our fee sales tax guide. Besides having the 10 steps you need to follow to be sales tax compliant, it also has a chart with all of the state economic thresholds. It's a very valuable resource! ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
That was a very helpful video, thank you. I have a few questions. I want to start a print on demand business on printify with a store on shopify. I am based in the EU but my print provider would be in the USA and so would my customers. If I understand correctly, I can just go ahead and start without having to register in the USA for taxes or anything. All I need to watch are my nexus thresholds for sales taxes. Are there VAT taxes or any other taxes I should worry about? Thank you
@@Morpheusv3 No, we only have sales tax. It is collected and remitted by state. Here's more information: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
@LedgerGurus Thank you. So am I understanding correctly that as long as I don't reach the economic thresholds in any state, I don't need to bother with sales taxes, I can simply just sell in the USA without worrying about any taxes in the USA?
If you run multiple shopify stores in the USA, do you know if these stores combined have to pay sales tax in other states when they all hit the threshold of sales in a state? or is it by each store hitting the threshold individually? thank you
@@LedgerGurus I did read that not every state counts combined sales under the same ein. it seems like such a great area to find out the information. I also found out that generally speaking it goes by each store hitting the threshold in shopify. do you know which states count it as combined stores? thank you
Thank you much for the video, It's very helpful. I am creating a Shopify store for fundraising for my nonprofit organization which is registered in the state of Georgia but I am working from Massachusetts and shipping stuff from Massachuttesset, should I pay tax to the state of Massachutteset or Georgia?
Great content. I am just starting up a clothing business. Do I need to use my personal identification? I don't have a business company or llc yet. What's best?
Thank you for the video. Setting up our new print on demand shopify store & has been stuck at the tax issue for a while. Some of our products are supplied from EU, while some are supplied from US. How do we set up the tax? Also, since we are new store, our physical presence is in CA. If customers purchased from other states, do we have to pre-collect the sales tax on Shopify and refund tax by end of tax season if we don't hit the economic nexus in other states? Thank you in advance for your help.
No. You don't collect tax until you have passed economic nexus and registered for a permit in that state. This video may help you: th-cam.com/video/suUqOj3bhvs/w-d-xo.html&lc=UgxRcQFlhtey0w1bcsZ4AaABAg
I just created my Shopify store and added my first product. Under the product section under pricing for that item, do I need to leave "Charge tax on this variant" checked or unchecked? As of now I have no sales as this is a brand new store. Do I only leave this checked if I have nexus or if I leave it checked now will Shopify know when to start collecting taxes as I meet nexus if/when I do in the future?
You only charge sales tax after you have nexus and have registered for a sales tax permit. For more information on all of this, download our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ and watch our free masterclass called The Uncomplicated Truth about Sales Tax - th-cam.com/video/iLcCFWXZXCA/w-d-xo.html
Hi, Video is quite informative. I recently launched a new Shopify store. My business is dropshipping from Virginia, and all of the products are in placed in China. I added VA to the area where I collect sales tax. Do I also need to mention where our products are shipped to other states?
Unless you have nexus in a state, you don't need to worry about sales tax there. Watch this video for more info on sales tax for dropshipping - th-cam.com/video/suUqOj3bhvs/w-d-xo.html
Hello! Thank you for this video. I am having concerns about setting up my Shopify taxes for my extremely new store. I have just started selling my children's book and have less than $1000 in total sales, but haven't set up taxes and want to make sure I do it correctly. Do you all only accept consultations from $2M companies or would I be able to connect with someone? Thank you for your time and insight!
You can still sales tax consultation with one of our experts if you're smaller than $2M. That's why we have them. You can schedule that here: calendly.com/ledgergurus-sales-tax/?
I am having trouble with managing the Shopify Tax. It keeps pushing me to set up an account with Vertex TaxCalc. Can you please assist with that? Is there a video for that? I'm a small business just starting out
Do you recommend setting up a separate bank account to deposit the taxes collected? And is there a way to direct the taxes collected by Shopify to the taxes bank account? Your videos are incredibly helpful!!
A lot of our clients do set up a different account at their bank for sales tax, but Shopify won't separate it out and deposit it like that for you. You have to do that yourself.
I live in Macedonia, so I am a non resident in the United States. Can I still use the Shopify Sales Tax feature? And does the whole nexus thing apply to me too? Until I reach a nexus in a state, I shouldn’t charge tax on my digital products at all? Leave the "Charge tax on this variant" unchecked? And what if you sell outside of the US, do you need to charge sales tax for countries in Europe for example?
You don't have to worry about sales tax in the US until you start passing nexus thresholds in states. So, yes, leave that box unchecked. I can't say anything about sales tax outside the US because we only deal with US sales tax at our firm.
I live in MA and my LLC / Store is out of Delaware. Can I just put my EIN in the mass tax ID spot for a while or should I register right away with the state? Also, one other LLC member in CA, so same question for him. (We have assumed both of us create physical nexus in our respective states and don’t have to worry about DE) Thanks & Great Vid!
Yes, you do have physical presence in your own state, so you do need to register there as soon as you can and start collecting sales tax. You don't need to worry about DE because it doesn't have state sales tax.
Are you selling FROM the US TO international countries? If so, you'll have to check with the countries you're trying to sell into. Are YOU international and trying to sell INTO the US? If so, check out this video about foreign sellers and US tax - th-cam.com/video/85JULhX_aRw/w-d-xo.htmlsi=BmydAcUdOiWWkMj7.
Question: the company that prints all of my products is in another state and will ship from that state. I will only ship original art. When I fill out my product info I have 2 locations listed. Should I change the location for each product to specify where it’s being shipped. I would think I need to do that for tax reporting. What do you think?
For questions with a bit of complexity like this, I suggest you schedule a consultation with our sales tax experts to get specific answers for your business. You can do that here: calendly.com/ledgergurus-sales-tax/?
Please help. Im so lost its not even funny. Im making a shopify store so i can sell pokemon cards, sealed pokemon boxes, and sell packs for live box breaks on youtube. I also live in minnesota. I dont have a llc or business license or anything like that. Please explain what do i do for the taxes and duties and all that?? I would legit join your membership or super thanks if you can actually help me get my store live.
Start by watching our free sales tax masterclass - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax. That'll be a good place to start getting your questions answered.
Hello, if i decided to open 3 shopify stores for example, would i need to register for 3 separate tax IDs for each store? And when taxes come i file them separately or together?
That's a great question, but there are different answers depending on how you've structured it. I suggest you schedule a sales tax consultation with one of our experts if you need detailed advice on this situation. calendly.com/ledgergurus-sales-tax/
We take a deposit for orders. Shopify charges us the tax on the same date. Our other bookkeeping software charged when item was paid in full. Can I change this in Shopify? Also, refunding and taxes. Can you comment on that?
This is something that would be best answered by our sales tax experts in a consultation. You can schedule that here: calendly.com/ledgergurus-sales-tax/?
This might be a dumb question but if I'm a small business just starting out and my "warehouse" is my personal home, would I be listing my home address under the location? I would have that this would not be visible to customers.
Hello, what if your nexus is in a state that doesn't have sales tax? Do I still need to collect sales tax for all other states that have sales tax that customers order from?
No. If you have nexus in a state that doesn't have sales tax, you don't have to worry about sales tax there. And you ONLY collect sales tax from customers in states where you have nexus. Go watch our sales tax masterclass. It's free and will explain all of this clearly. ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
Not immediately. You only need to register in states as you reach the nexus threshold or have a physical presence there. Watching this should help make it clearer - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
Thanks very informative! I have a few questions in regards to collecting sales tax. We can only start collecting sales tax when the threshold has been met or you have physical presence but I am confused on why click charge tax on this product? Also if we don’t have nexus in a state and are not collecting sales tax when a customer purchases a product are they not paying sales tax on it since I am not collecting from them or is it being collected to my physical presence state?
You don't click on "charge tax for this product" until after you have nexus in a state. Then you'll put in your permit information for that state and you'll charge tax on that product, in that state. And no, the customer won't be paying sales tax if you aren't charging them.
Sorry I’m still a bit confused. So my question is since I am working from home in Florida that means I have a physical presence and I need to start collecting sales tax right? If so once I list a product if I click charge tax on this product will Shopify only charge tax on the state I have signed up to collect from while excluding the other states?
@@BrianRod-pu7jwThank you for clarifying your question. Yes, that is correct. Make sure you register for a sales tax permit, and then yes, you will click "charge tax on this product" and Shopify will only charge in that state.
Thank you so much for responding so quickly I appreciate that! One more question one I have my permit is it good for ever or it requires annual renewal? Thanks again!
What does this sentence mean on Avalara? Get Avalara State Sales Tax Registration $349 Per Location What It Means (Location) Does Avlara work with regular Shopify or does it have to be Shopify Plus? Does Avara automatically send tax returns for sales tax and do I pay through it?
That means per state usually. It has to be Shopify Plus. You have to approve them, but yes, it'll send the returns for you. See more here - th-cam.com/video/-DhtTN5_Rh4/w-d-xo.html
I’m trying to set up my Shopify account and I’ll be selling digital products only. Do you all do consulting sessions so I can get help with this? I have questions about taxes too.
hello I set up a limited liability company in Wyoming with a registered agent because I'm not a US resident and I opened a Shopify store to sell clothes, print on demand by Printful. Do I need to register for Wyoming sales tax or register when I reach the economic threshold? I have a WordPress store to sell commission marketing. Are there sales taxes or any kind of taxes on them? Is there a video of how to submit sales tax returns?
We have a client with this same situation. Yes, you'll would need to register in WY because that is where your "business is located" (physical nexus). You'll need to collect sales tax in WY after being registered. When you talk about commission marketing, it doesn't sound like tangible personal property, so I'm guessing its not taxable. If it is tangible personal property, it would be taxable. Here's a video about filing sales tax - th-cam.com/video/MHTdAIO-kB8/w-d-xo.html and here's a playlist with all of our sales tax content - th-cam.com/play/PL8z_d3aPaZE8b2eNr3zUkubQzO4qQALbt.html
This video was very helpful as we are in the process of merging our eCommerce store to Shopify! With these new tax features do you think it is still necessary to have an account with Avalara AvaTax? It kind of seems counterintuitive to have both.
That depends. Are you moving TO Shopify or out of Shopify? Either way, you still need a sales tax engine to calculate sales tax in real-time, so keep that in mind.
I live in Pennsylvania and got a reseller permit/wholesale license. I am getting clothes with no sales tax and supposed to collect when sold but clothing doesn’t have sales tax here. What am I supposed to do?
In Shopify, is there a way to only collect sales tax from the states we've registered with? I only see "collect sales tax" on the product page but no where to create any 'rules' for that. What do people usually do for this?
@@brookedugas2047 Probably the best way to get your questions answered is in a consultation with one of our sales tax experts. You can find the link here: calendly.com/ledgergurus-sales-tax/?
If people are paying on Shopify, then yes, you do still have to collect sales tax on Shopify. Amazon only does sales tax for orders done through Amazon.
It depends on how the state wants you to file. Some states get really specific. If you want help going through a specific state application, I encourage you to schedule a sales tax consultation with one of our experts. They can walk through it with you. calendly.com/ledgergurus-sales-tax/?
I am a non-resident in the United States and have an LLC with a registered agent in Wyoming to work in print-on-demand and affiliate marketing. Do I need to register for Wyoming sales tax before I start selling via the online store, or register when I reach the minimum sales threshold? or transactions.
Yes, you will need to register in Wyoming because that is where your "business is located" (physical nexus). You'll also need to collect sales tax in WY after you've registered.
@@LedgerGurus What about affiliate marketing? I enter the money into the company's bank account. Are there any taxes on it?What about tax forms in Amazon Associates and eBay? I use company information. Is it enough or do I have to fill out more forms?
@@hasansalameh7709 This isn't really about sales tax. It's more of an income tax question. We don't do income tax, so you'll have to find a regular tax accountant to help you get the answer.
Hello, re locations screen and shipping address of inventory...what if you are drop shipping? I.e., strictly shopify platform online drop shipping...is this screen left blank?
Locations - you need to put in the physical address where your main office is. warehouse, headquarters, etc. Address of inventory - you don't have inventory if you are drop shipping, so keep it blank. If you are unable to keep it blank, we would suggest you call Shopify for more help.
Sales tax applicability on receipt against order or fulfilment of such order. Example: An advanced payment of $5000 was received on January 23, but the fulfilment of such order was completed on May 23. In which month should the sales tax be paid, January or May? and also for nexus: in which month above transaction is added in nexus?
For detailed questions like this, we suggest a sales tax consultation so we can be sure to answer all parts of your questions - calendly.com/ledgergurus-sales-tax/
hello any info taxing for dropshipping in the united states? im in colorado and im kind of lost, but i akready have my brand registered llc, and have a sales tax license for the state and city
I would love to consult with you about this sales tax on shopify as we’re about to launch our shop soon. Let me know if you provide consulting service. Thank you in advance!
Am I required to register for sales tax in January 2023 if I receive orders exceeding the nexus threshold (e.g., $300,000) for that month (e.g., January 23), but in the following month (February 23), the orders are cancelled?
The general rule of thumb is that nexus is reached by either transaction count or sales amounts in a rolling year. You shouldn’t be collecting sales tax until you're registered. Cancelled orders will offset the original orders. And refunds can be taken in the current month but returns should be amended for prior periods. You've got some pretty detailed questions. It's hard to go into that much depth on a TH-cam comment, so I suggest you schedule a sales tax consultation with one of our sales tax experts - calendly.com/ledgergurus-sales-tax/
@@LedgerGurus Thank you. So, I only have online shop no physical store. And, my online sale is very low that I don't have to worry about the threshold anytime soon. My question is that then, do I need to add states manually (basically all US states since I'm selling online) without tax ID? I have tax ID from the state that I live in so I'll enter tax ID for that... besides that, I'm good...? I'm asking since I don't see estimate tax when check out (i was just testing out earlier to see everything looks good...). I'm currently using Bigcartel and they don't have such a set up like this and everything is just automatic... >..
@@doyoungahn2802 The reason I suggested you watch the video was to explain the concept of nexus. You don't have to worry about collecting and remitting sales tax until after you have nexus in a state. Also, it is ILLEGAL to collect sales tax unless you have registered for a sales tax permit with the state. So, no. Do not add all the states yet. Don't add any states except the one you're in, if you're in the US. You already have nexus there since you have a physical presence there.
For really specific situations like this, we recommend you schedule a call with our sales tax experts so they can walk through what you need to do with them. You can schedule that by clicking on this link: calendly.com/ledgergurus-sales-tax/?
When I go to the "monitor your liability" section I am not seeing any of the states and associated rules like we see on your tutorial. Reasons for this?
@@LedgerGurus but we've had plenty of sales to multitude of states which would certainly make enough to become a percentage of $100k. Currently updating to the newest theme version, we'll see if that changes anything. Also, commented on another video of yours yesterday. Eagerly awaiting your response!
You'll probably have the service set up as a "product," most likely. You'll need to create a tax override (or exemption) for that product/service, and set it to be exempt from sales tax by unchecking "charge taxes on this product." This can be used for other nontaxable products, as well.
I am trying to override my sales tax obligations in Minnesota and New Jersey as I sell clothing. Even with the correct clothing product categorization, Shopify still collects tax. I attempted to do a manual product override and it still seems to want to collect sales tax from those states. I am not sure what I am missing
I would suggest you schedule a sales tax consultation so one of our experts can over this with you. You can schedule that here - calendly.com/ledgergurus-sales-tax/
If I have a clothing brand and I am selling from California would I need to register for a tax id number in all the states that I have sold a garment to ?
No, only in the states you have nexus in. Download our free sales tax guide to learn more about this and what the economic thresholds are for each state. ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello , my case is little bit different, can you help plz? I'm from india , and i want to sell digital products and services across the world via shopify. What compliance I'll have to follow in that case? I know that I'll be paying the income tax to Government of India only ? Anything other?
I cannot help in any country except the US because we only work with US sales tax. If you're interested in learning more about US sales tax, I suggest you download our free 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If tax is required to be paid on a receipt basis and later the corresponding order is cancelled, what would be the tax treatment in such a case? *setoff against other order *setoff case where I have no sales in refund month or upcoming months. *refund *any other
You've had several complicated questions. I highly recommend a sales tax consultation with one of our experts to get all your questions thoroughly answered - calendly.com/ledgergurus-sales-tax/
I'm sorry, but we don't do this kind of consulting work. We are an accounting firm and we can do consultations on ecommerce accounting and sales tax. If you're interested, you can schedule a sales tax consultation here - calendly.com/ledgergurus-sales-tax/ and an ecommerce accounting consultation here - calendly.com/ledgergurus-bd-team/ecommerce-accounting-consultation?month=2023-06
Thanks for the video’s it is really good info. I am in the process of starting a drop shipping business. I live in New Zealand but I want to get a virtual address for my business in US or Canada either with Ipostal1. Virtual address is too expensive in New Zealand. Will i have to pay tax in US/Canada. Because I would pay income tax in New Zealand. I think….
We only work with US sales tax, so I can't answer you about Canada. I suggest you download our free sales tax guide to know what to expect for the US. You can find that here: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
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I was having a panic attack because I was having order coming in and I didn't really understand how Shopify collect sales tax. So I had a mini freaked out because I thought my settings was wrong but everything was functioning correctly.
Thank you so much for being knowledgeable and explain the threshold for me. That is really great that Shopify does all the leg work for you, I never knew that I don't have to collect everything I sell by 8% just because I'm in Texas.
I'm glad we could help you!
Finding that shopify report has helped so much! Thank you
You are so welcome!
This video is very helpful. I've been looking for months. Thank you so much!
So glad we could help you!
Your video was so very informative and I have subscribed to your channel! ❤
Awesome! Thank you!
Great video! I do have a few questions. First question does this new shopify sales tax act as a sales tax engine and should I download an app like TaxRex for sales tax filings? Second question I just started a Print on Demand Clothing brand and selling through Shopify I am based out of CA, am I only responsible to report taxes in CA since I'm an online store or do I have to get a sellers permit for every state that I sell too? Lastly, since I use a Print on Demand platform Printify to make my products they ship out from different locations that I won't know the addresses too I am still responsible to report those locations when I am using their services?
1) At this point, you still have to use a separate engine for sales tax filings.
2) You only need to collect and remit sales tax in states where you have economic or physical nexus. You can learn more by watching our free sales tax masterclass: ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax?TH-cam&
3) To be safe, you can get a list of all those locations and add them to your Shopify settings.
I love all your videos and the way you explain everything. Can you do a video of how to get the report from sale tax from the state you are charging taxes.
We've got channel-specific videos on how to do this in our sales tax courses. You can find those here: ledgergurus.thinkific.com/collections/sales-tax?TH-cam&
Hello! Why is it that other States charges so many different types of taxes? Is this normal? Or is this with Shopify Stores only? I had a client asking why was she charged for state and county at the same time and this has never happened with her orders on other stores (even for bigger businesses). I have a skincare brand and would definitely appreciate your help in understanding the taxes. Thank you!
Another ex. I have a client that was charged the following taxes on 1 order:
Illinois State Tax
Cook County Tax
Elk Grove Village City Tax
Regional Transport Authority
I think it's a lot and most of these are unfamiliar to me. My business is only based in Florida
Sales tax is different in every state. And depending on the state, you can be charged up to 4 levels of sales tax - state, county, local, special district. That is what you are seeing. It is not specific to Shopify. It's the law for any state. Those other businesses may not have their sales tax set up correctly.
Also, FYI...you are only responsible for collecting in states where you have physical presence (like Florida) or where you have passed the economic nexus threshold. If you don't have nexus in one of these two ways, you don't need to collect sales tax. And by the way, it is illegal to collect sales tax where you have not registered for a permit. If you have, you either need to register and remit the sales tax or refund it to the customer.
For more information on sales tax and how it works, as well as a chart that shows economic thresholds by state, download our 10 Steps to Ensure Sales Tax Doesn't Burn Down Your Ecommerce Business guide: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
So we don't need to worry about getting individual state tax ID numbers until we're getting close to hitting the threshold correct? And we don't need to pay taxes on anything before the thresholds?
That's correct. The only one you need to worry about right now is the state you're physically in.
I love that shopify is doing this! makes tracking so much easier! My question is, do I need a permit in the state of Illinois to begin collecting sales tax or is not required until I am about to meet that threshold, and how is there a software that can pay/remit those sales taxes for me?
If you have a physical presence in IL, then you need to register and start collecting. If you don't, then you don't need to do that until you pass the economic threshold. Here's another video on various sales tax software to choose from: th-cam.com/video/-DhtTN5_Rh4/w-d-xo.htmlsi=pf8vNfeJQM1HSluR
@LedgerGurus I'm not sure if my house is considered a physical nexus. I don't have a warehouse or an office or anything outside my home.
@@amyroseauthorofficialYes, it is.
Hey so I’ve noticed that even cities and counties have different tax rate percentage in the same state. So I’m wondering how would I calculate a bunch of orders here in Florida when it’s time to remit since the rates are all different? Or does Shopify separate and calculate each taxes per order since the rates are different per city? Also when do you recommend remitting sales tax monthly or quarterly?
When you register for a permit, the state will tell you how often to remit. And you can see the amount of sales tax calculated for each order on your sales report. Here's how to read it: ledgergurus.com/shopify-sales-tax-report-how-to-find-understand-it/?TH-cam&
Excellent video...thank you for posting. I am trying to wrap my head around this so I would like to summarize my understanding with a question. I plan to sell a book (quantity 900) from my garage in southern California. Profits will not break $15,000. I understand that Shopify Tax will calculate sales, generate reports, and inform me when taxes need to be paid per state based on economic Nexus. I also understand that tax filing requirement is different state by state. With an established LLC, when will I know to file taxes? Does the Shopify Tax program inform me?
It should, but it would also be wise for you to be watching it yourself. I also encourage you to download our fee sales tax guide. Besides having the 10 steps you need to follow to be sales tax compliant, it also has a chart with all of the state economic thresholds. It's a very valuable resource! ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
so thorough, thank you!
You're so welcome!
That was a very helpful video, thank you. I have a few questions. I want to start a print on demand business on printify with a store on shopify. I am based in the EU but my print provider would be in the USA and so would my customers. If I understand correctly, I can just go ahead and start without having to register in the USA for taxes or anything. All I need to watch are my nexus thresholds for sales taxes. Are there VAT taxes or any other taxes I should worry about? Thank you
We only handle US sales tax, so I can't answer questions about VAT taxes.
@LedgerGurus No, I know about taxes in my country. I was asking about taxes in the USA only. Is there no such thing as VAT taxes in the USA?
@@Morpheusv3 No, we only have sales tax. It is collected and remitted by state. Here's more information: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?
@LedgerGurus Thank you. So am I understanding correctly that as long as I don't reach the economic thresholds in any state, I don't need to bother with sales taxes, I can simply just sell in the USA without worrying about any taxes in the USA?
If you run multiple shopify stores in the USA, do you know if these stores combined have to pay sales tax in other states when they all hit the threshold of sales in a state? or is it by each store hitting the threshold individually? thank you
That depends on if you have them listed under the same SSN or EIN. If yes, then yes, you're looking at combined sales for thresholds. If no, then no.
@@LedgerGurus I did read that not every state counts combined sales under the same ein. it seems like such a great area to find out the information. I also found out that generally speaking it goes by each store hitting the threshold in shopify. do you know which states count it as combined stores? thank you
Thank you much for the video, It's very helpful. I am creating a Shopify store for fundraising for my nonprofit organization which is registered in the state of Georgia but I am working from Massachusetts and shipping stuff from Massachuttesset, should I pay tax to the state of Massachutteset or Georgia?
You'll have to do both since you're considered to have a physical presence in both states.
Wonderful content. Thank you 🙏
We're so glad to help.
Great content. I am just starting up a clothing business. Do I need to use my personal identification? I don't have a business company or llc yet. What's best?
Yes, you'll need to use your personal information.
Thank you for the video. Setting up our new print on demand shopify store & has been stuck at the tax issue for a while. Some of our products are supplied from EU, while some are supplied from US. How do we set up the tax? Also, since we are new store, our physical presence is in CA. If customers purchased from other states, do we have to pre-collect the sales tax on Shopify and refund tax by end of tax season if we don't hit the economic nexus in other states? Thank you in advance for your help.
No. You don't collect tax until you have passed economic nexus and registered for a permit in that state. This video may help you: th-cam.com/video/suUqOj3bhvs/w-d-xo.html&lc=UgxRcQFlhtey0w1bcsZ4AaABAg
I just created my Shopify store and added my first product. Under the product section under pricing for that item, do I need to leave "Charge tax on this variant" checked or unchecked? As of now I have no sales as this is a brand new store. Do I only leave this checked if I have nexus or if I leave it checked now will Shopify know when to start collecting taxes as I meet nexus if/when I do in the future?
You only charge sales tax after you have nexus and have registered for a sales tax permit. For more information on all of this, download our 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/ and watch our free masterclass called The Uncomplicated Truth about Sales Tax - th-cam.com/video/iLcCFWXZXCA/w-d-xo.html
Thanks for sharing! Do you know if Launch Cart offers this type of ease of setup for sales taxes? Its shopify competition.
We don't have any experience with this platform, so I can't say.
Hi,
Video is quite informative. I recently launched a new Shopify store. My business is dropshipping from Virginia, and all of the products are in placed in China. I added VA to the area where I collect sales tax. Do I also need to mention where our products are shipped to other states?
Unless you have nexus in a state, you don't need to worry about sales tax there. Watch this video for more info on sales tax for dropshipping - th-cam.com/video/suUqOj3bhvs/w-d-xo.html
Hello! Thank you for this video. I am having concerns about setting up my Shopify taxes for my extremely new store. I have just started selling my children's book and have less than $1000 in total sales, but haven't set up taxes and want to make sure I do it correctly. Do you all only accept consultations from $2M companies or would I be able to connect with someone? Thank you for your time and insight!
You can still sales tax consultation with one of our experts if you're smaller than $2M. That's why we have them. You can schedule that here: calendly.com/ledgergurus-sales-tax/?
@@LedgerGurus Great! Thank you
Do you have a video reporting the sales tax per state ?
We have this video: th-cam.com/video/S75mraGpleE/w-d-xo.html. We also have this article on it: ledgergurus.com/how-to-file-sales-tax-online/?TH-cam&
I am having trouble with managing the Shopify Tax. It keeps pushing me to set up an account with Vertex TaxCalc. Can you please assist with that? Is there a video for that? I'm a small business just starting out
I'd suggest scheduling a sales tax consultation with one of our experts - calendly.com/ledgergurus-sales-tax/?
Do you recommend setting up a separate bank account to deposit the taxes collected? And is there a way to direct the taxes collected by Shopify to the taxes bank account? Your videos are incredibly helpful!!
A lot of our clients do set up a different account at their bank for sales tax, but Shopify won't separate it out and deposit it like that for you. You have to do that yourself.
@@LedgerGurus Thank you.
I live in Macedonia, so I am a non resident in the United States. Can I still use the Shopify Sales Tax feature? And does the whole nexus thing apply to me too? Until I reach a nexus in a state, I shouldn’t charge tax on my digital products at all? Leave the "Charge tax on this variant" unchecked?
And what if you sell outside of the US, do you need to charge sales tax for countries in Europe for example?
You don't have to worry about sales tax in the US until you start passing nexus thresholds in states. So, yes, leave that box unchecked. I can't say anything about sales tax outside the US because we only deal with US sales tax at our firm.
I live in MA and my LLC / Store is out of Delaware. Can I just put my EIN in the mass tax ID spot for a while or should I register right away with the state? Also, one other LLC member in CA, so same question for him. (We have assumed both of us create physical nexus in our respective states and don’t have to worry about DE) Thanks & Great Vid!
Yes, you do have physical presence in your own state, so you do need to register there as soon as you can and start collecting sales tax. You don't need to worry about DE because it doesn't have state sales tax.
Thank you!!
What if you are dropshipping products? What would you put for the fulfillment location??? Thanks!
Your dropshipper's location
If I'm selling internationally do I have to collect sales taxes? Thank you for the informative video
Are you selling FROM the US TO international countries? If so, you'll have to check with the countries you're trying to sell into. Are YOU international and trying to sell INTO the US? If so, check out this video about foreign sellers and US tax - th-cam.com/video/85JULhX_aRw/w-d-xo.htmlsi=BmydAcUdOiWWkMj7.
Question: the company that prints all of my products is in another state and will ship from that state. I will only ship original art. When I fill out my product info I have 2 locations listed. Should I change the location for each product to specify where it’s being shipped. I would think I need to do that for tax reporting. What do you think?
I only ship original art from my location. Just to clarify
For questions with a bit of complexity like this, I suggest you schedule a consultation with our sales tax experts to get specific answers for your business. You can do that here: calendly.com/ledgergurus-sales-tax/?
Please help. Im so lost its not even funny. Im making a shopify store so i can sell pokemon cards, sealed pokemon boxes, and sell packs for live box breaks on youtube. I also live in minnesota. I dont have a llc or business license or anything like that. Please explain what do i do for the taxes and duties and all that?? I would legit join your membership or super thanks if you can actually help me get my store live.
Start by watching our free sales tax masterclass - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax. That'll be a good place to start getting your questions answered.
Hello, if i decided to open 3 shopify stores for example, would i need to register for 3 separate tax IDs for each store? And when taxes come i file them separately or together?
That's a great question, but there are different answers depending on how you've structured it. I suggest you schedule a sales tax consultation with one of our experts if you need detailed advice on this situation. calendly.com/ledgergurus-sales-tax/
We take a deposit for orders. Shopify charges us the tax on the same date. Our other bookkeeping software charged when item was paid in full. Can I change this in Shopify? Also, refunding and taxes. Can you comment on that?
This is something that would be best answered by our sales tax experts in a consultation. You can schedule that here: calendly.com/ledgergurus-sales-tax/?
This might be a dumb question but if I'm a small business just starting out and my "warehouse" is my personal home, would I be listing my home address under the location? I would have that this would not be visible to customers.
Yep. If that's where your inventory is stored, that's the address you use.
Hello, what if your nexus is in a state that doesn't have sales tax? Do I still need to collect sales tax for all other states that have sales tax that customers order from?
No. If you have nexus in a state that doesn't have sales tax, you don't have to worry about sales tax there. And you ONLY collect sales tax from customers in states where you have nexus. Go watch our sales tax masterclass. It's free and will explain all of this clearly. ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
Thanks so much for providing this free lesson! @@LedgerGurus
so so you have to register in every state,plus your home state?
Not immediately. You only need to register in states as you reach the nexus threshold or have a physical presence there. Watching this should help make it clearer - ledgergurus.thinkific.com/courses/the-uncomplicated-truth-about-sales-tax
Thanks very informative! I have a few questions in regards to collecting sales tax. We can only start collecting sales tax when the threshold has been met or you have physical presence but I am confused on why click charge tax on this product? Also if we don’t have nexus in a state and are not collecting sales tax when a customer purchases a product are they not paying sales tax on it since I am not collecting from them or is it being collected to my physical presence state?
You don't click on "charge tax for this product" until after you have nexus in a state. Then you'll put in your permit information for that state and you'll charge tax on that product, in that state. And no, the customer won't be paying sales tax if you aren't charging them.
Sorry I’m still a bit confused. So my question is since I am working from home in Florida that means I have a physical presence and I need to start collecting sales tax right? If so once I list a product if I click charge tax on this product will Shopify only charge tax on the state I have signed up to collect from while excluding the other states?
@@BrianRod-pu7jwThank you for clarifying your question. Yes, that is correct. Make sure you register for a sales tax permit, and then yes, you will click "charge tax on this product" and Shopify will only charge in that state.
Thank you so much for responding so quickly I appreciate that! One more question one I have my permit is it good for ever or it requires annual renewal? Thanks again!
@@BrianRod-pu7jw Generally you have renew periodically.
What does this sentence mean on Avalara? Get Avalara State Sales Tax Registration $349 Per Location What It Means (Location)
Does Avlara work with regular Shopify or does it have to be Shopify Plus?
Does Avara automatically send tax returns for sales tax and do I pay through it?
That means per state usually. It has to be Shopify Plus. You have to approve them, but yes, it'll send the returns for you. See more here - th-cam.com/video/-DhtTN5_Rh4/w-d-xo.html
I’m trying to set up my Shopify account and I’ll be selling digital products only. Do you all do consulting sessions so I can get help with this? I have questions about taxes too.
Yep. You can scheduled a sales tax consultation here - calendly.com/ledgergurus-sales-tax/
hello
I set up a limited liability company in Wyoming with a registered agent because I'm not a US resident and I opened a Shopify store to sell clothes, print on demand by Printful. Do I need to register for Wyoming sales tax or register when I reach the economic threshold?
I have a WordPress store to sell commission marketing. Are there sales taxes or any kind of taxes on them?
Is there a video of how to submit sales tax returns?
We have a client with this same situation. Yes, you'll would need to register in WY because that is where your "business is located" (physical nexus). You'll need to collect sales tax in WY after being registered.
When you talk about commission marketing, it doesn't sound like tangible personal property, so I'm guessing its not taxable. If it is tangible personal property, it would be taxable.
Here's a video about filing sales tax - th-cam.com/video/MHTdAIO-kB8/w-d-xo.html and here's a playlist with all of our sales tax content - th-cam.com/play/PL8z_d3aPaZE8b2eNr3zUkubQzO4qQALbt.html
This video was very helpful as we are in the process of merging our eCommerce store to Shopify! With these new tax features do you think it is still necessary to have an account with Avalara AvaTax? It kind of seems counterintuitive to have both.
That depends. Are you moving TO Shopify or out of Shopify? Either way, you still need a sales tax engine to calculate sales tax in real-time, so keep that in mind.
Things have changed, you have an update video?
Not yet, but thank you for the suggestion.
I live in Pennsylvania and got a reseller permit/wholesale license. I am getting clothes with no sales tax and supposed to collect when sold but clothing doesn’t have sales tax here. What am I supposed to do?
You don't need to worry about it right now. If the wholesaler was selling into PA, they still wouldn't be collecting sales tax.
In Shopify, is there a way to only collect sales tax from the states we've registered with? I only see "collect sales tax" on the product page but no where to create any 'rules' for that. What do people usually do for this?
You can set that up under "Taxes and Duties-> Manage Tax Collection." That part starts at 0:50 in the video.
Hi as of yesterday my Shopify stopped adding in taxes. Example if my items $55 total charged to customer is $55? Help
I have been having Shopify for 2 years and this just atsrted
@@brookedugas2047 Probably the best way to get your questions answered is in a consultation with one of our sales tax experts. You can find the link here: calendly.com/ledgergurus-sales-tax/?
If we use MCF through Amazon for all our shopify orders, do we still have to collect Sales Tax on shopify?
If people are paying on Shopify, then yes, you do still have to collect sales tax on Shopify. Amazon only does sales tax for orders done through Amazon.
Do you also report sales tax per county??
It depends on how the state wants you to file. Some states get really specific. If you want help going through a specific state application, I encourage you to schedule a sales tax consultation with one of our experts. They can walk through it with you. calendly.com/ledgergurus-sales-tax/?
Hello, SO, because of nexus. I can leave the box that asks “collect sales tax on this item un-ticked, correct?
Yes, if you don't have nexus, you don't need to collect sales tax.
@@LedgerGurus thank you!
@@demior5582 You're welcome!
I am a non-resident in the United States and have an LLC with a registered agent in Wyoming to work in print-on-demand and affiliate marketing. Do I need to register for Wyoming sales tax before I start selling via the online store, or register when I reach the minimum sales threshold? or transactions.
Yes, you will need to register in Wyoming because that is where your "business is located" (physical nexus). You'll also need to collect sales tax in WY after you've registered.
@@LedgerGurus What about affiliate marketing? I enter the money into the company's bank account. Are there any taxes on it?What about tax forms in Amazon Associates and eBay? I use company information. Is it enough or do I have to fill out more forms?
@@hasansalameh7709 This isn't really about sales tax. It's more of an income tax question. We don't do income tax, so you'll have to find a regular tax accountant to help you get the answer.
Hello, re locations screen and shipping address of inventory...what if you are drop shipping? I.e., strictly shopify platform online drop shipping...is this screen left blank?
Locations - you need to put in the physical address where your main office is. warehouse, headquarters, etc.
Address of inventory - you don't have inventory if you are drop shipping, so keep it blank. If you are unable to keep it blank, we would suggest you call Shopify for more help.
@@LedgerGurus Thank you.
Sales tax applicability on receipt against order or fulfilment of such order.
Example: An advanced payment of $5000 was received on January 23, but the fulfilment of such order was completed on May 23.
In which month should the sales tax be paid, January or May?
and also for nexus: in which month above transaction is added in nexus?
For detailed questions like this, we suggest a sales tax consultation so we can be sure to answer all parts of your questions - calendly.com/ledgergurus-sales-tax/
hello any info taxing for dropshipping in the united states? im in colorado and im kind of lost, but i akready have my brand registered llc, and have a sales tax license for the state and city
Here's a video we did on sales tax for dropshipping - th-cam.com/video/suUqOj3bhvs/w-d-xo.html
I would love to consult with you about this sales tax on shopify as we’re about to launch our shop soon. Let me know if you provide consulting service. Thank you in advance!
Yes, we have sales tax consultations available. You can schedule one here: calendly.com/ledgergurus-sales-tax/
@@LedgerGurus this is great. I’ll definitely check it out.
Am I required to register for sales tax in January 2023 if I receive orders exceeding the nexus threshold (e.g., $300,000) for that month (e.g., January 23), but in the following month (February 23), the orders are cancelled?
The general rule of thumb is that nexus is reached by either transaction count or sales amounts in a rolling year. You shouldn’t be collecting sales tax until you're registered. Cancelled orders will offset the original orders. And refunds can be taken in the current month but returns should be amended for prior periods. You've got some pretty detailed questions. It's hard to go into that much depth on a TH-cam comment, so I suggest you schedule a sales tax consultation with one of our sales tax experts - calendly.com/ledgergurus-sales-tax/
Do you have worry about “use tax” as well if you are a remote seller and haven’t met the threshold to that state
@@sarahashley5783 Nope. If you are not registered there, you don’t have to worry about use tax.
I have an online shop. Is this meaning I need to manually add all States to collect taxes?
No. Don't do that until you've watched this video - th-cam.com/video/ETJB643qHU4/w-d-xo.html
@@LedgerGurus Thank you. So, I only have online shop no physical store. And, my online sale is very low that I don't have to worry about the threshold anytime soon. My question is that then, do I need to add states manually (basically all US states since I'm selling online) without tax ID? I have tax ID from the state that I live in so I'll enter tax ID for that... besides that, I'm good...? I'm asking since I don't see estimate tax when check out (i was just testing out earlier to see everything looks good...). I'm currently using Bigcartel and they don't have such a set up like this and everything is just automatic... >..
@@doyoungahn2802 The reason I suggested you watch the video was to explain the concept of nexus. You don't have to worry about collecting and remitting sales tax until after you have nexus in a state. Also, it is ILLEGAL to collect sales tax unless you have registered for a sales tax permit with the state. So, no. Do not add all the states yet. Don't add any states except the one you're in, if you're in the US. You already have nexus there since you have a physical presence there.
And how, for example, when we choose the state of Illinois, how can we automatically take the state tax and exclude it for cities
For really specific situations like this, we recommend you schedule a call with our sales tax experts so they can walk through what you need to do with them. You can schedule that by clicking on this link: calendly.com/ledgergurus-sales-tax/?
When I go to the "monitor your liability" section I am not seeing any of the states and associated rules like we see on your tutorial. Reasons for this?
I'm not sure. If you're not seeing any states, you may not be approaching nexus anywhere.
@@LedgerGurus but we've had plenty of sales to multitude of states which would certainly make enough to become a percentage of $100k. Currently updating to the newest theme version, we'll see if that changes anything. Also, commented on another video of yours yesterday. Eagerly awaiting your response!
How do you categorize non taxable services in shopify?
You'll probably have the service set up as a "product," most likely. You'll need to create a tax override (or exemption) for that product/service, and set it to be exempt from sales tax by unchecking "charge taxes on this product." This can be used for other nontaxable products, as well.
I don't see all of this information, is it because I have only had 2 orders?
Probably.
I am trying to override my sales tax obligations in Minnesota and New Jersey as I sell clothing. Even with the correct clothing product categorization, Shopify still collects tax. I attempted to do a manual product override and it still seems to want to collect sales tax from those states. I am not sure what I am missing
I would suggest you schedule a sales tax consultation so one of our experts can over this with you. You can schedule that here - calendly.com/ledgergurus-sales-tax/
That’s so Hard to do. I have to check each state what is taxable or not. :-(
Yep! One of the challenges of US sales tax.
If I have a clothing brand and I am selling from California would I need to register for a tax id number in all the states that I have sold a garment to ?
No, only in the states you have nexus in. Download our free sales tax guide to learn more about this and what the economic thresholds are for each state. ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hello , my case is little bit different, can you help plz?
I'm from india , and i want to sell digital products and services across the world via shopify. What compliance I'll have to follow in that case? I know that I'll be paying the income tax to Government of India only ? Anything other?
I cannot help in any country except the US because we only work with US sales tax. If you're interested in learning more about US sales tax, I suggest you download our free 10 Steps of Sales Tax guide - ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If tax is required to be paid on a receipt basis and later the corresponding order is cancelled, what would be the tax treatment in such a case?
*setoff against other order
*setoff case where I have no sales in refund month or upcoming months.
*refund
*any other
You've had several complicated questions. I highly recommend a sales tax consultation with one of our experts to get all your questions thoroughly answered - calendly.com/ledgergurus-sales-tax/
Hello I m begginer can you help me starting my shopiify dropshipping store. I need your help.
I'm sorry, but we don't do this kind of consulting work. We are an accounting firm and we can do consultations on ecommerce accounting and sales tax. If you're interested, you can schedule a sales tax consultation here - calendly.com/ledgergurus-sales-tax/ and an ecommerce accounting consultation here - calendly.com/ledgergurus-bd-team/ecommerce-accounting-consultation?month=2023-06
Thanks for the video’s it is really good info. I am in the process of starting a drop shipping business. I live in New Zealand but I want to get a virtual address for my business in US or Canada either with Ipostal1. Virtual address is too expensive in New Zealand. Will i have to pay tax in US/Canada. Because I would pay income tax in New Zealand. I think….
We only work with US sales tax, so I can't answer you about Canada. I suggest you download our free sales tax guide to know what to expect for the US. You can find that here: ledgergurus.com/portfolio/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/?