2020 Shopify sales tax setup for stress-free compliance | Walk-through guide
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- Опубліковано 16 сер 2020
- WE'VE RECENTLY UPDATED THIS VIDEO FOR THE NEW SHOPIFY UI.
CLICK HERE TO WATCH IT: • UPDATED Shopify Sales ...
How to setup Shopify sales tax for stress-free compliance. This video takes you through how to setup Shopify sales tax settings.
Shopify sales tax compliance can be complicated and stressful, but we hope this video gets you on the right track. It includes screenshots and explanations of all the steps needed to setup your Shopify store.
Our associated blog will give you additional details:
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**SALES TAX COMPLIANCE PLAYLIST: **
• Sales Tax Compliance
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** DOWNLOAD: 10 Steps to Ensure Sales Tax Doesn’t Burn Down Your Ecommerce Business”: **
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** BLOG: Complete Guide to Sales Tax Nexus for eCommerce Sellers: **
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"** BLOG: Shopify Sales Tax Report | How to Find & Understand It: **
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** VIDEO: eCommerce Sales Tax | When Do Sellers Need to Collect? **
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** VIDEO: Do You Qualify for a Sales Tax Exemption? **
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That was succinct and super informative. If every UA-cam video contained that much value, it would be a different world. Great job!
youtubers make drop shipping sound so easy but they leave out this part
Yeah, sales tax is no joke. It makes everything more complicated.
@@LedgerGurus do i have to have a sales tax number to collect tax?
@@CHENOTV You do have to register with the state before you can collect sales tax in it. It's illegal to collect if you haven't done that yet.
For more information on sales tax, we strongly recommend you download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, we at LedgerGurus are in the process of creating a course for online sellers to teach them how to register, file, and remit sales tax. We want to make sure that we are providing exactly what online sellers need and are looking for. Would you be interested in giving us a few minutes of your time so we can ask you some questions? If so, please click this link to schedule a time - calendly.com/kelleybirrell. Thank you!
@@LedgerGurus so at the end of the year I will be responsible for that? 😞
@@CHENOTV You are responsible after you hit nexus in those states. That's why it's so important to be watching this.
Great video, very clear and to the point! Thanks!
Thank you so much for creating this video - it's very informative! I am trying to learn more about tax legalities about e-commerce.
My questions are:
How do you know which states are not tax shipping?
How do you know which products are taxable?
Also, as a future Shopify/Online seller,
How do I pay taxes? How do I register with the IRS?
How often do I have to pay taxes, quarterly/yearly?
Besides keeping track of income earned and expenses, anything else I should be keeping track of?
What are tax deductibles and tax breaks?
Is there a YT video on how to file taxes in the US for sellers in the e-commerce world you would recommend?
Again, THANK YOU SO MUCH FOR CREATING THIS TYPE OF CONTENT FOR US NEWBIES.
Liliana, great questions! To fully answer all of these questions would require additional information from your end. You can schedule a consultation with one of our sales tax experts here: calendly.com/ledgergurus-sales-tax.
Best of luck!
Need help with your Shopify sales tax compliance? Schedule a 1-hour consultation with Kexin here: calendly.com/ledgergurus-sales-tax/1-hour-sales-tax-consultation. Also, check out our sales tax course here - ledgergurus.com/resources/sales-tax-course-updates/.
Or view our sales tax services and resources page: ledgergurus.com/services/sales-tax/
Thank you! Your instructions are better than the tutorial video Shopify supplied on their site.
Yay! I'm so glad you found it so helpful. :)
Great tips to those who want to have a successful e-commerce business.
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This UA-cam channel is really very informative and effective.
Thanks!
thank you so much, will be launching next month and still gaining knowledge.
You're welcome. Good luck with your launch.
I wish I could like this video more than once. Great Explanation 👌🏽🔥
Thank you! We really appreciate that. :)
THIS IS SOOO HELPFUL! THANK YOU FOR SHARING!!
Glad it was helpful!
Thank you sooo sooo much I want to open an online business but I was scared because I had no idea about how to pay tax that’s what stop me from trying !!!
Don't let that stop you!! We have so many ways to help and guide you through this process. It doesn't need to scare you anymore.
When you're just starting out, the only state you need to worry about registering in is your home state. When you make sales there, you'll need to charge sales tax and remit it to the state. You don't need to worry about charging sales tax in other states until you start approaching the economic thresholds. For a complete and updated list of those thresholds, along with valuable information about doing your sales tax properly, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can find it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
As you get further along in your business, sales tax will get more complicated, but you don't need to be afraid of it. We have several levels of help for ecommerce businesses - DIY (How to Do-It-Yourself -> an email crash course with links to articles and videos like this one), DIWY (Do-It-WITH-You -> a sales tax course where we teach you exactly what you need to do and give you access to experts who can answer all your questions), and DIFY (Do-It-FOR-You -> for when you are ready to outsource). We are happy to help you! Our goal is to help as many ecommerce businesses be successful as we can.
This helped so much!!
Glad you found this helpful!
Thank you so much for this video! Definitely subscribed, you have amazing information. Quick question though, I am based in the US but I just started getting a lot of traction on my Shopify store .I wanna make sure I'm doing the right thing you know haha so both fullfilment and purchases are done in South Africa. I am just the owner. Do I charge taxes based on south african tax guidelines or based on USA guidelines
It depends on where your customers are. If you are selling to US customers, then I would look at US guidelines.
Really helped! Thank you!
You're welcome :)
Great video! Very helpful! I have a question though, if I am based in the state of NY and ship to every other state but my drop shipping store doesn’t make more than $1M a year or 200 transactions in one state then I don’t need to collect taxes in that state, correct? And then, in step 1 of this video I would just have to enter the state of NY because that’s where I am based and where I should collect taxes for now, I wouldn’t need to add all the other states, did I understand that right?
The thresholds are different for every state. And none of them are $1M. Most are closer to $100,000. We have a list of all the states' thresholds in the appendix of our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" PDF. You can get that here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, you definitely need to pay sales tax in your home state / state your business is registered in, but then you only need to pay taxes in other states when you meet the thresholds. Be aware that Florida, Missouri, and Kansas can be tricky.
We're getting ready to launch a course to teach business owners everything they need to know about sales tax. To learn more, go to: ledgergurus.com/resources/sales-tax-course-updates/
Great Video thanks a Ton
Glad you found it helpful!
Thanks for the Good video,
Hi! I loved your great explanation of these functions in Shopify. I loved it. I have one question. I hope you can help. We use Shopify to sell beekeeping equipment all over the US. Many of our customers have an agricultural tax exemption so they do not pay sales tax. That is easy to do because we can uncheck the charge sales tax box in that customers profile. However some of our products do not qualify for that exemption. Do you know how I can exempt a customer from sales tax BUT also exempt a product from that sales tax exemption? Thank you for any ideas!!!
Hi! You will need to create a collection of the exempt product and then add an override for that collection and select the states you want to apply it to.
Thank you so much !!!! Your the best !!!! 🌺🌺
You're very welcome!
Hello great video! Do you setup the taxes to collect based on where you are fulfilling your orders? Or do you setup taxes for where your customers are?
Is there a LedgerGuru price plan to provide support ?
You set up taxes for for where your customers are.
We are in the process of updating our website with our price plan. In the meantime, you can check out our services page - ledgergurus.com/services/sales-tax/
@@LedgerGurus does that require getting a tax license in every state?
@@shannonwymore4864 hi! You only need to register for a sales tax license in the states you have nexus (physical and economic).
Thank you so much for your video!
I have a question though. If my small e-commerce business (sole proprietorship) is registered in Florida but I live in Oahu Hawaii 6 MONTHS out of the year, do I have to register my business there too in order to do sales (shipping) from there too? Thanks xx
Sorry for the late reply but yes you need to register in Hawaii as well.
Thank you 🙏🏾 ❤️
Great video,it's very helpful. I am a non us citizen living outside of us, but I have a single member LLC registered in WY. I do not have any office or warehouse in the US. Do you think I have nexus in Wyoming state and should collect sales tax for my dropshipping order to that state? Thanks!
If you're registered in Wyoming, you do need to collect and remit sales tax there.
Great Video, Very Informative. Couple of Questions.
1) If i have a LLC in Wyoming where i have registred for Sales tax and my Dropshipping Supplier is based in Florida then do i need to mention both Locations in Shopify?
2) When i mention both, it asks me to mention my Sales Tax Id in Florida as well, which i dont have as i have it only for Wyoming. Do i need to collect Sales Tax in Florida as well even if i dont have a nexus or i can leave it blank?
You don't need to mention FL. Your dropshipper's inventory doesn't create nexus for you, which means you don't need to collect sales tax in FL right now.
@@LedgerGurus Does this apply for other states? I have an LLC in TX but because I travel for work in California, I ship a lot of my packages from there. I don't have a warehouse and work out of wherever I am staying at the time.
Thank you so much for this awesome and brief video, yet it covered so much. I am based in Botswana, however I intend to sell to the US market. I am using Modalyst for my supplier services. How do I apply for a tax permit being a non citizen and non US based individual? I have issues again with my location settings, it has my home country address by default how do i go about this one?
We just helped some international businesses get sales tax permits in the US. I’m happy to make a video about it! I’m general, you will need an FEIN first, then US bank account and US mailing address. Let us know if you would like us to help you with this process!
Great video. How about products that the tax ability varies from state to state. For example supplement is taxable in CA but exempt in IL. Will Shopify recognize this or override needs to be done. Thank you!!
You will need to add the override on a state by state basis. Let me know if that makes sense, or we are happy to have a call with you to walk you through the process.
hi thanks for the information can you tell us if we are using oberlo location so please tell us about tipping tex
Our understanding is that sellers on Oberlo are dropshipping. If you are only dropshipping, you would would only need to worry about sales tax in states where you have high economic activity. Once you reach $100K in annual sales or 200 transactions in a state, you would want to check their economic nexus laws. If you meet that state's threshold, then you are liable for sales to for customers in that state.
I used to sell on eBay tin the earlier time, sometimes I sold items to foreign countries and had no clue how to collect sales tax or how to report it. My hobby biz die all because I had no business knowledge. Thank you so much for the info, I will do well next time.
Sorry to hear it went badly last time. Good luck next time. Hopefully our videos will help things go better.
Thank you, very much.
You are very welcome!
Great video! I have a question: I dropship to the UK from the US. I do not collect taxes but when I buy from Aliexpress, I have to pay taxes. Sometimes, that tasks my entire profit. How should I deal with this? If I collect taxes, how to pay the UK government? I don't have VAT there.
We don't deal with UK taxes. But in regards to paying taxes on product you resell, you should be to provide them with a sales tax exempt certificate and then not have to pay sales tax.
Hi there, thanks for doing this video. Its a nightmare to have to set up each state and jurisdiction within states to collect tax in those destination sourced states, is there a service out there that does this? maybe integrates with shopify through an app and streamlines this maddening process?! Thanks :)
Hi Aran, you can view our review of sales tax apps video here: ua-cam.com/video/1L7s6llWlRo/v-deo.html
We also recommend that as you start to obtain nexus in multiple states that you get sales tax experts involved and handling your sales channels and sales tax apps. You can contact us here if you are interested in our sales tax services: ledgergurus.com/services/sales-tax/
What about if you sell a product through a print on demand vendor app like Printful or Printly? Also, how to you remit the sales tax to the states? Do you use a service? app? software?
You still need to determine where you have nexus due to physical presence (where your business is based) and economic nexus and then still setup sales tax settings Shopify. Because vendor apps like Printful are not marketplace facilitators, they have no responsibility to collect and remit the sales tax.
As far as remitting, each state have a portal where you can e-file and pay sales tax. So you just create an online account with each of the states you collect sales tax in and file and remit online. There are also apps that can help with this. You can watch our review on few of those apps here: ua-cam.com/video/1L7s6llWlRo/v-deo.html
Awesome Video, One thing I am curious about, is does Shopify allow for export of sales for my accountant for each quarter so he can do my taxes or is there a 3rd party app I need or how does that work?
Yes you can definitely download it yourself. Go to orders - export - custom date and select the date you need for reporting and a zip file will be emailed to your email account linked with your store.
Thank you 😊
Of course! Glad it helped!
Thank you for this video! So helpful
Question- I have an eCommerce Shopify website. I'm based in Ohio. Do I only collect tax in the state of OH or all states?
Please help! :(
Only in OH as of now, until you pass economic nexus threshold in other states. I have a new-ish video on “nexus” that might be helpful!
I'm a new online retailer based in OR, a sales tax free state (origin NEXUS?) Business address is a UPS store mailbox. I want to sell online in U.S. and the world. So, I've added all the U.S. states in Shopify. Now since I'm selling to people in U.S.(destination NEXUS?), I then have to register with each state to get a sales tax ID (if they require/) correct? I'll override tax on shipping settings based on per state info in Shopify. How does the int'l portion work? AMAZING VIDEO! THANKS FOR THE CLEAR INFO.
Hi Mia, since you don't have physical presence or economic nexus in other states, you don't need to register, collect, and remit/file for sales tax. The most common ways that will create nexus states outside your home state is if you store inventory anywhere else, hire employees in other states, or if you start to meet economic nexus thresholds in other states ($100K in annual revenue or 200 in annual transactions are the lowest thresholds). You can view this video for more on sales tax nexus: ua-cam.com/video/_WHEq2T530I/v-deo.html
I’m confused. I am dropshipping and only have a tax ID for the state I am in. Do I still have to go through and manually set up taxes for every state considering that my customers might order from other states? Or do I just leave the taxes to collect from the state I’m in?
NO! Do NOT set up taxes in every state. It is illegal to collect taxes in a state if you haven't registered there yet. That is a can of worms you DO NOT want to open. You don't need to worry about sales tax in a state unless you have nexus there, either. That can be physical nexus, because you have a physical presence there (inventory, employees, etc.) or economic nexus because you have passed the economic or sales volume threshold in that state. To learn more about nexus, thresholds, and how all this works, download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, we have a sales tax course where you can learn all the ins and outs of sales tax, so you can be sure you're doing it right. Click here for more info - ledgergurus.com/resources/sales-tax-course-updates/.
Question! 1. Does Shopify have a system that notifies you when you’ve reached nexus in a state to start applying taxes?
2. Before applying taxes for nexus, should I apply for a sales tax permit from that state first?
3. Once I reach nexus (ex: 100,000$ or 200 transactions) and start applying tax for a nexus state, do I report the taxes quarterly or annually?
4. Since I didn’t start collecting nexus tax until I reached the 100,000$ or 200 transaction mark, how do I know how much tax to pay on the previous 100,000 or 200 transactions? And which quarter should I report it in?
5. Does Shopify have a tax report for summary for each state or states you’ve reached nexus?
Please let me know. These answers would be very helpful.
1. No. You can watch our other video on how to download and understand your Shopify sales tax report to determine nexus: ua-cam.com/video/RWZHnD0AEwo/v-deo.html
2. Yes. Legally you need a sales tax permit before collecting sales tax.
3. This depends on the state and how much sales tax you are collected. Generally, the more sales tax you collect, the more often you are required to file.
4. The date in which you meet the threshold for the past 12 months is when you are legally required to start collecting. If you didn't collect or remit for a period of time, you can always file and remit back taxes.
5. Watch our new video: ua-cam.com/video/RWZHnD0AEwo/v-deo.html
taxes are so confusing.
I seriously hate it sm.
Not even the actual paying of taxes but the stupid states website from 1995
Hello I see you are very helpful here so maybe you will be able to answer my question. So I have registered company in EU contry and as far I know when I'm selling products to EU countries I do have collect VAT but now I'm in process of sending my inventory to USA fulfilment center and I would like to ask you if I have to set up collecting taxes for USA customers or do not collecting taxes because company is in EU and fulfillment center in USA
Hi Damian, any state that your inventory is stored in the US, you are liable to register, collect, and remit sales tax for sales to customers in those states. Another common way that will require you to worry about sales tax is if you have large economic activity in a particular state. If you approach $100K in annual sales or 200 transactions in any state, you will want to check their "economic nexus" laws. For more help you can download our PDF that will take you through more specifics: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Great video! I’m from Texas, so I’m supposed to charge taxes on shipping, do I need to override any state? Thank you
Before I can answer your question, I need to know if you've already the checked the box to automatically calculate tax on shipping.
@@LedgerGurus yes i have
So for a store set up in Oregon. Would you need to add every state in the lower 48 manually?
You only need to add states that you have nexus in. For more information on nexus and economic thresholds, download our "10 Steps t Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." It has LOTS of great information in it. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Quick question! My nexus is in the state of washington. so I only need to charge tax on shipping for order places from someone who also lives in washington correct?
Yes, you only need to worry about sales tax for sales in the states where you have nexus.
Do we have to tax shipping for the states that require you to tax on shipping no matter what? or do we only start taxing on shipping as well once we meet the economic nexus thresholds in that state?
Hi Saarang, only if you have nexus in that state.
Hi can you please answer a quick question, at what point will it become a requirement for you to charge taxes, is it only after you make a certain amount a year? And if I’m not required to charge tax yet, do I uncheck the “All prices include tax” box in the tax settings on the Shopify website???
You are required to remit sales tax for sales in states where you have sales tax "nexus". Most likely this is in any states where you have a physical presence (owners or employees live, business registered, inventory held, etc.) or a high amount of economic activity. State's thresholds for economic activity differs, but if you have $100K in annual sales or 200 in annual transactions in any state, you will want to check their economic nexus thresholds. Any states you have nexus in, you'll need to register for a sales tax permit, then collect sales tax from customers and remit sales tax to the state. Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
Thanks for your info, if my products are coming from china straight to the customers and I don't have a warehouse, how do I handle taxes in that situation
You need to register and collect with the state where you are located and monitor economic nexus going forward.
Many counties in GA, with varying sales taxes, can you collect ga sales tax that way, not just state, but deeper.
Yes the default sales tax setting looks at the customer’s shipping address and will calculate tax on state, city and county level.
Thks for the info. We sell in Shopify in Delaware where there is no sales tax, so we don't need to set up sales tax in Shopify?
Correct! Until you pass economic nexus in other states :)
That was clear as mud
LOL! Thank you for the feedback. :) What questions do you have that we can help you with?
I have my tax ID in the state of NC. When setting up to collect taxes on each US purchase from my store, do I have to go in and add each state even though I don't have a tax ID in those states?
Hi Katherine. You should only add the tax ID and collect sales tax for states where you have sales tax nexus and have registered for a sales tax permit. Here's another video in helping you understand sales tax nexus: ua-cam.com/video/_WHEq2T530I/v-deo.html
Thank you, I have a question. If i am located in BC Canada but use FinerWorks as a vendor, they are located in TX USA, and I'll be selling worldwide, do I have to set it up for literally ever country\state\provience?
Heavens, no! You only set it up to collect sales tax in states that you have physical and/or economic nexus in. To understand that better, download our free "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can get it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi thank u I was looking for answer for my question on UA-cam but haven't got any answer yet .. so u mentioned that some platforms offer sales taxes and some is my own responsibility I want to sell my photos on adobe stock..are they offering sales tax or I need to manually do it as u did in the video?
We believe Adobe Stock is considered a third-party marketplace and therefore is required to collect and remit sales tax for its contributors in all but three states as of 2021 - KS, MO, and FL. To be safe, we recommend contacting Adobe Stock and/or the states in which you have nexus. Best of luck!
@@LedgerGurus thank u
I have a Texas sellers permit and will be collecting taxes from Texas so I can pay the taxes each quarter. I am just confused on other states, if my business grows to where I exceed another state's threshold then that's when I should register? Since it's small, I should be okay with just collecting in Texas correct?
Hi Christopher, that is correct. Once you approach $100K in annual sales or 200 annual transactions in a state, you should check their economic nexus thresholds. The other type of nexus that you need to consider as a small seller is "physical presence". If you inventory is stored in any other states, for example through Amazon FBA, then you'd need to register, collect, file, and remit in those states as well. Here's our video on sales tax nexus for more info: ua-cam.com/video/_WHEq2T530I/v-deo.html
Hi, thank you for this video. I make handmade items and I live in California. I am completely lost with the whole tax set up. I don't even know what a nexus is, can you help? 🙏🏼
Absolutely! I'll give you two resources to start with. The first is our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
The second is our sales tax course - ledgergurus.com/resources/sales-tax-course-updates/
Hello! I have a question. Do you need a tax id in every state? I'm going to be running my shop out of florida and already got that tax id. Do I need to go to every state's website and apply for a tax id?
You only need a tax id in a state when you have nexus there. You'll need to charge FL sales tax because you're based there, but you don't need to worry about the other states until you pass the thresholds. Sales tax is a seriously complicated thing, but we've created a free masterclass to walk you through everything you need to know to get started, including the 3 things NOT to do when you're setting up your sales tax. It's called "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." If you're starting a Shopify store, I highly recommend you watch it. ledgergurus.com/resources/sales-tax-masterclass/
We are starting a print on demand shop with printful (their own fulfillment centre) and will be later expanding dropshipping with udroppy (their own fulfillment centre). We are based out of Virginia. Do we register for sales tax id with Virginia only or do we need to contact Udroppy, printful and register with the state they have fulfillment centre in ?
We suggest registering with only Virginia. Your drop shippers might ask you for resale certificate at some point so they don't charge you sales tax.
The version of Shopify in this video is different from the current version. Do we still have to enter the warehouse addresses manually when there is the section "App Locations" with the apps that are automatically listed underneath?
Yes, those need to be manually entered and you can assign one as the primary warehouse for fulfilment, as well.
Hi there! My name is Zachary Tushaus, I have been on the verge of opening a dropshipping business for months now; I have been watching quite a few of your videos and I realize now that a percentage of my sales will go to taxes. I'm from Minnesota and where I live I have both local and state taxes. Do you have a step by step process as how I can begin work on registering for sales tax so I can begin my online shopify business? Thanks in advance.
Zachary, you can download our "10 steps" PDF that will help you: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Feel free to reach out if you have anymore questions or need a consultation to get everything setup.
Great video. So we are based in North Dakota. I have the sales tax set up in North Dakota. So does that mean anyone outside the state of North Dakota doesn’t have to pay tax? Only people in North Dakota pay tax?
Yep, that's correct. You don't charge sales tax in other states until you pass their thresholds. It sounds like you've got a good start on this. If you'd like to get a clear roadmap for everything you need to do regarding sales tax, I recommend you to watch our free masterclass called "The Uncomplicated Truth about Sales Tax for eCommerce Businesses." It'll walk you through everything you need to know to get started, including the 3 things NOT to do when you're setting up your sales tax. If you're starting a Shopify store it'll be an invaluable resource. ledgergurus.com/resources/sales-tax-masterclass/
Hi, how do I add the NYS Special Tax Rule override to Shopify store? Step bt Step. TY!!!
Hi! It depends on what you are doing the override for. Generally, you need to add a collection first, then manually add the items, then add the override to assign the collection specifically to a state at a certain rate. If you need more help, feel free to schedule a consultation here: calendly.com/ledgergurus-sales-tax/1-hour-sales-tax-consultation?month=2021-12
Is there a 2022 Version of this video? Awesome lesson by the way
Yes we are working on one!
Such a great video thank you! 👍
I've searched through comments, but can't find my answers, sorry if repeated....
1. I'm in the UK, hand making products and shipping to the US (New business, making around 10k a year so far).....do I charge tax on my hand made products?
2. In the same online shop, I sell print on demand products, using a fulfillment centre based in the US (shipping from various warehouses)...with my 'current' low income, do I need to charge tax on these products right now?
I also have an Etsy shop and they have charged tax on a few of my orders, which they said they 'deal with', but it got me thinking about my Shopify store too.
Thanks in advance 👍
As an overarching answer before I get into specifics, I highly encourage you to download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. It should help answer most of your questions about sales tax. That said, let's dive into your questions.
Where you pay sales tax is based in large part on nexus, both physical and economic. It's unlikely that you'll need to pay yet on economic nexus since your sales are still quite low. That said, if you cross those thresholds, you will have charge sales tax, even on your handmade items.
Etsy is a marketplace facilitator, which is why they are charging sales tax. You do need to watch your sales across all your sales channels, but you're still too small for most economic thresholds yet (watch out for Kansas sales, though. You DO need to charge sales tax on all sales in Kansas.)
Are you dropshipping from the fulfillment center, or do you own the inventory? If you're dropshipping, you don't need to worry about sales tax yet. If you own the inventory, you do need to charge sales tax in any state your inventory is in because that is considered physical nexus.
@@LedgerGurus Thank you so much, I have downloaded your PDF and will have a good read through it.
This is SO helpful!!
I presumed Etsy charge tax as an accumulation of all their sellers, I get that, TY 😁
I don't hold any stock, it is print on demand (kinda drop shipping), so it's sent from various fulfillment centres across the U.S.
It's going to be a long time before I will be making anywhere near the sales limit I think 😁
One more thing I'm having trouble with, is the Google merchant center....all my products are pending for some reason? Would you have another video with any help / advice?
Thank you SO SO much 👍😁
@@HERETOABSORB I'm glad you've found this all so helpful. We don't have any videos on the Google merchant center. I think you're going to have to contact them directly or google your question to get it answered. Good luck!
@@LedgerGurus Thank you again, you have a new subscriber in me, great channel 👍👍👍
@@HERETOABSORB Awesome! Thank you!
So if I have an online store base in California my understanding is that I have to collected sales tax on all states that requires tax? Do I manually input these states one by one in the tax section? And if I sell products internationally?
Hi! Since you are based in California, you should register in CA and then turn on tax setting on Shopify and collect and remit sales tax collected in CA. For the other states, you don't need to register or collect tax unless you have nexus in those states, same goes internationally.
Does Shopify provide a report on sales and transactions monthly for each state so I will know when I am getting close to having sales tax threshold "nexus" ?
Hi Elizabeth, you can download the orders report by month and filter by ship-to state or run a pivot table.
I am a dropshipper but also sell my own products on the same store. I live in a European country and i trade with customers from Europe and United States. Recently I sold some products in United States (first time) but didn't know if i should charge any tax so I didn't although I later noticed that my products are marked 'tax included' by default. Should I exclude tax from my products since my Nexus is not in the States, and follow my country's regulations for taxing sales?
Hi Elena, if you don't have nexus in any US states due to physical presence or economic nexus, then you should not be collecting sales tax from customers. It's technically illegal to collect sales tax from customers if you don't have a sales tax permit to do so. Since that collected money is a liability you owe to the state.
Here's another video we have on understanding sales tax nexus: ua-cam.com/video/_WHEq2T530I/v-deo.html
So let’s say my business is based in Oregon, USA. I dropship products from various states in the US as well as Canada. Do i need to set up sales tax?
You only need to worry about sales tax if you have economic nexus (sell a lot of products) to customers in other states. Your customers determine where you have nexus, not your drop shippers and their inventories.
hello! I am planning to do dropshipping from the Philippines and my clients will be in the US. You said something about the economic nexus in which we only need to pay sales tax if we reach an annual sales of 100k or 200 transactions annually. My question is if let’s say we reach 200 transactions in 2 different states, do we need to register and remit sales taxes on those states separately? Does this mean that everytime we will be reaching 200 transactions in every state, we will be needing to register on that state again where we met the eco nexus? Also, is there a way to get information on the different tax rate percentage each state collect? Thank you and looking forward to your response.
Each state has its own economic nexus threshold (though several are similar). You have to register and remit sales tax separately for each state. You'd only register in each state once and you pay sales tax there after you've hit the threshold. We go into a lot more detail on this in our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" download - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. We're in the process of updating it and will be adding the economic thresholds for each state. This link is for the old one.
Your sales channel should have a chart of the tax rate percentages for each state.
Thank you for this! Question - I live in CO which is a home rule state. Doesn’t that mean I need to collect use tax from everyone outside the state? I don’t understand how to do that in Shopify.
Hi Maddi, since you live in CO and therefore have sales tax nexus in CO, you only need to worry about collecting sales tax from sales that you ship to customers in CO. Before collecting from customers, make sure you register for a sales tax permit from the CO department of revenue. As your business grows, you may start to have sales tax nexus in other states. You can download our sales tax guide to help you understand sales tax nexus and registering, collecting, and filing/remitting sales tax: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, here's another video to help with understanding sales tax nexus: ua-cam.com/video/_WHEq2T530I/v-deo.html
Is a sales tax permit the same as a sellers permit ?
@@ItsKimestry Yes. States differ in what they call it.
@@LedgerGurus do all the states require a sales permit?
So if you put the tax on for a product t you’re selling and someone purchases the item and ofc pays the tax, does that tax go to you still or straight to gov?
Hi Lucy, the sales tax goes to the seller. Then the seller is liable to remit that sales tax to the sate. Remember to register for a sales tax permit in any state before you collect sales tax in that state. Then you will have deadlines to file and remit any sales tax that you collect. Here's a PDF download that helps you understand these steps in greater detail: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Hi! I'm just about to launch my Shopify online store. I make and sell products in Canada. I would like to be able to sell and send my products to USA. I'm very confused about how should I do that. Do I just ship my products to USA or I need to charge them tax and duties? Thank you in advance for your help.
When it comes to sales tax, you would need to register, collect, and remit sales tax in any states where you have "nexus". Since you live and store product outside the US, this would likely be when you meet "economic nexus" thresholds. Basically, when you approach $100K in annual revenue or 200 transactions in any state, you'd want to check that state's economic nexus thresholds. If you meet their economic thresholds, then you are liable to collect and remit sales tax. Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
Hi there,
I am just starting my Shopify dropshipping store from the Uk, and the idea is to sell to various countries, including the USA, UK, Australia, Canada, and New Zealand. What are the things I need to make sure I do so I don't get unexpected mail through the post?
Keep track of your nexus footprints in all of those countries and register proactively.
What if I dont have a physical store or warehouse personally but the products I get it from have their own company's and warehouse do I still need put tax I'd on states in usa
If you own inventory stored in another state, that's physical presence and therefore you are liable for ales tax in that state, doesn't matter if you own the warehouse or stores. But if you are just dropshipping and buying the product from another company but never own the inventory, then that should not create physical presence or nexus and you aren't liable for sales tax until you reach high sales amounts in those states. Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
You would have to send the money to the states yourself right or the website handles that?
You will need to send the money to the states either by check or payment online.
When I tell shopify to start collecting sales tax in a state does it automatically know the rates for each county or do I have to enter all of them?
When it is time to remit sales tax each month/quarter does shopify have a good report for getting the information needed for each state?
I would love for the 2nd question to be answered
We put out a blog post recently on this topic - ledgergurus.com/shopify-sales-tax-report-how-to-find-understand-it/
Video starts around 3:00 minutes.
Hello if I Do not live in us & have a partnership with a fulfillment center warehouse based in us do I still need to collect taxes on my sales? I take orders on online shop & fulfillment center ship the product to them.
Thanks in advance!
Yes, you certainly have to register in the state your fulfillment center is in because you have physical nexus there. You also need to be watching your sales to see which states you hit economic nexus in. For more details about economic nexus and the thresholds, download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." There is a list of economic thresholds by state in the appendix. ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Also, I could use your help. We're trying to get super clear on what small businesses need in terms of accounting and sales tax needs. Would you be willing to hop on a call/Zoom with me so I can ask you few questions?
What About The SKU For The Products? When You Adding Tax To The Products How Do You Fill That Out?
You'd probably get this question answered best with a sales tax consultation when you can meet with a guru to get all your questions answered. Click here to schedule - calendly.com/ledgergurus-sales-tax/
Great Video, I live in the Philippines and doing a dropshipping business in the US. I formed my LLC in Wyoming, Do I already need to charge taxes on my e-commerce store even if I am just starting? How do I set up my taxing?
Because you are based in Wyoming, you have nexus there already. You do need to register in that state so you can collect and remit sales tax there. You'll need to watch your numbers for other states to see when you pass economic threshold and need to register in each state. You can download our "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" for more information on that here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/.
hi how did you form your llc in wyoming? do u have someone there to check your mail for you? i live in cali and llc fee is $800 annually :/
@@minzyminz9987 hello, you can use incfile service to form your LLC
I am located in Hong Kong and dropshipping from aliexpress ,can u give me any info on this for my taxes since I'm new like how I can get the tax id etc ?
For sales tax, you only need to register and collect in states where you have a high volume of sales or transactions. Once you reach $100K in annual sales or 200 transactions in one state, we suggest checking their economic nexus laws to see if you need to register, collect, and remit
Hello! I am dropshipping, and I am located in Illinois while my supplier is in China. To collect tax, do I need to register a sales tax id with every single state even though I am only in Illinois? I am just confused on who I am able to charge sales tax on or if I even need to.
You only need to register for a sales tax id and collect sales tax from customers in states where you have nexus. Since you are located in Illinois, you have "physical nexus" there. Then you will need to worry about checking economic nexus thresholds in other states as you approach $100K in annual sales or 200 transactions in any other states. Best of luck! Here is another video to help you understand "nexus": ua-cam.com/video/_WHEq2T530I/v-deo.html
@@LedgerGurus thanks for your answer i was about to ask same question.
@@laylaaitali5090 You're very welcome. :)
So I am in California should I charge taxes from the beginning or should I start collecting after tax nexus?
You should charge tax from customers in California from the beginning.
Hello, if you know the answer please help. I am from Belgium, so I have a VAT number, but I dropship only to the US, do I also have to collect taxes in this case? I'm not so sure since my business is registered in Belgium.
Hi Lena, you likely only need to worry about sales tax in states where you have a lot of economic activity. Once you reach $100K in annual sales or 200 annual transactions in a state, you'll want to check that state's "economic nexus" threshold. If you are over their threshold, then you are liable for sales tax. You should then register for a sales tax permit, collect from customers in that state, and file/remit that sales tax to the state. Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
If you have printify as a a 3rd party for Shopify do you have to reach out for all those warehouse locations if you aren’t handling it?
To make sure they are collecting sales tax? Sorry I’m not fully understanding your question.
Where do we find a list of states that do/don't charge tax on shipping? Thanks!
Hi Em, here is a good resource: www.avalara.com/blog/en/north-america/2018/11/how-to-handle-sales-tax-on-shipping-a-state-by-state-guide.html
Hello, how can I set tax for UK but other need to see prices and can buy without the VAT, thank you
I'm sorry, but we can't help you with that. We only work with US-based sales tax.
HI there. I live in Nevada and use Printify with my Shopify store. For all of the sales I have, Printify adds that customer’s tax to my costs so it seems that they’re taking care of it for me. But I’m not sure how to set up Shopify sales tax so that my customers have that sales tax added to their purchase. I have my sales tax collection started in Nevada. How do I start collecting taxes in all other states?
Printify is charging you sales tax because they have nexus in those states. You should only charge sales tax where your have nexus - physical presence (NV) and any other states you pass economic nexus. Before you reach that you can not legally collect sales tax. You can give resale certificate to printify so they stop charging you sales tax though.
Do you need to add each state? If so, I’m only able to add “United States”. I’ve sold items and my reports don’t show what the tax should be. I’m so confused about this. Do I need to calculate myself?
You need to add each state where you have nexus. For more on nexus (where you have a liability to register, collect, and file/remit sales tax), you can watch this video: ua-cam.com/video/_WHEq2T530I/v-deo.html
And just as a reminder, you'll need to register with the states before you add the states. It's illegal to collect sales tax from customers without have a sales tax permit in a state.
@@LedgerGurus okay so basically i only collect taxes from orders in the same state as my sales permit?
@@jonitacaldwell920 yes, you need a sales tax permit in a state before collecting from orders in that state. You are liable to collect sales tax in states where you have a physical presence or significant sales activity (if a state has economic nexus laws). Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
@@LedgerGurus So I have a permit in New York. So does this mean I only collect taxes from customers that are from NY? Cuz I had a customer the other day from Nevada.
@@ItsKimestry That is correct...for orders shipped to NYC. You don't need to collect in other states until you have nexus there. Here's another video to help: ua-cam.com/video/_WHEq2T530I/v-deo.html
Hi mate, great vid. Qq: i am located in Germany - that is the address of my Shopify store - but I only sell to the US. I will pay German income tax but since i don’t have a US address i will not pay tax in the US. Therefore, i should not change tax in my store. Is that correct?
Yes that’s correct, until you pass economic nexus threshold in a state :)
New Shopify owner here. Do I need to add all the states to collect sales tax? I know there are five states that don't have a sales tax.
You only register and start collecting sales tax for a state AFTER you have reached economic nexus thresholds . We have an appendix with those thresholds in our download "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business." You can download it here - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/. We are in the process of updating it, and when you download the current one, you're automatically on the list to receive the new one when it comes out.
Can you do this for international ship tax?
Right now we only work with US-based taxes, but if we change that, we'll let you know.
So I live in Texas and we are only allowed to collect sales tax in Texas. So do I need to tax-exempt on all the other states?
I think you may have misunderstood. You can only collect sales tax in states that you have registered for a sales tax permit in. And you shouldn't register until you have nexus in that state. To learn more about nexus and sales tax in general, click here to download our PDF "10 Steps to Ensure Sales Tax Doesn't Burn Down Your eCommerce Business" - ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
If my Shopify store mainly making sale in the US, how to handle sale tax? (My company pay tax in HK)
You can download our 10 steps to sales tax compliance that will take you through how to handle sales tax:
ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
How would the tax be cacualted if set my fulfilment as from Amazon MCF? Which original address I should setup?
If it’s an intrastate transaction and it’s an origin based state, the rate would be determined from the “ship from” location. If it’s an interstate transaction, all those transactions are destination based and the rate will be calculated based on the “ship to” locations
Hi, if I wish to show the tax ID on all my invoices for a Canadian shop (more precisely, a Shopify store in Quebec, showing GST/HST tax IDs), how can I do that in my Shopify store?
Many thanks! :)
We don’t deal with Canadian GST/HST, so we don't have an answer for this question.
@@LedgerGurus oh okay, thank you :-)
So do I put my tax I'd on all the states this the most part I'm having hard time on
Only in states where you have sales tax "nexus" and have registered for a sales tax permit. Here's another video to help you understand sales tax nexus: ua-cam.com/video/_WHEq2T530I/v-deo.html
I am a college student and i recently got on shopify. I am currently dealing with sales taxes and I am not sure as to if i should charge them
Hi Aubry, sales tax is a huge pain! You can download our sales tax compliance PDF that will help you understand where you need to collect: ledgergurus.com/resources/downloads-2/10-steps-to-ensure-sales-tax-doesnt-burn-down-your-ecommerce-business/
Make sure to register for sales tax permits in any states before collecting. Best of luck!
I am a sole proprietor, do I need a resale ID number or can I use my SSN? If I need a resale ID number where can I get that and does it cost money.
You can use your SSN!
Me and my partner live in the UK and are a UK registered company dropshipping products from Asia to the US. Do we have to charge US Sales Tax on the products being shipped from Asia and being sold there?
You don't unless you pass economic nexus threshold in the states in the US.
Hi I live in Greece where we have a tax called income tax that is different to the products' tax do you know if my income tax is automatically paid by shopify keeping a small amount of my income except for the products tax
Shopify doesn’t withhold revenue for income tax purposes.