When operating a business on Shopify, most sellers will need to pay a percentage in sales taxes. However, tax rules and regulations appear to be complicated and often change over time.
Lucky for you, Shopify has various tools that can help you with your Shopify sales tax preparation. However, you will register your company with your local or federal tax authorities to manage sales tax. This isn’t something Shopify can help you with.
So if you are a new merchant, let’s now get to grips with how to deal with your Shopify sales tax.
What Is Sales Tax on Shopify?
Sales tax is one of two other taxes you’ll deal with on the platform when it comes to Shopify accounting. The other two tax forms are VAT and goods and services tax.
Sale tax is a simple concept in principle. A customer buys your product or service, and then you charge them a one-off tax percentage on that. This tax then goes to the government.
Since sales taxes in the United States are set by states and local governments, this may be confusing. To better understand how the system works, look at the US sales tax on digital items. It’s also worth considering hiring an accountant for Shopify business to deal with taxes on Shopify.
How Does Sales Tax Work on Shopify?
Sales taxes will differ from region to region around the globe. Thus, Shopify has different factors and processes you have to consider for the various regions.
Let’s now look at some handy information on how sales tax works on Shopify in some key regions.
Shopify Merchant Selling in the USA
For merchant sellers in the US, select the automated tax settings. Or you can manually define the rates for each municipal, county, and state tax.
The selection process will also include shipping taxes. Your tax settings will, after that, be determined by the state you are currently in.
Shopify Merchant Selling in Canada
To pay the tax, merchants in Canada must submit their tax registrations. In January 2019, Shopify introduced a new approach for Canadians to set up taxes. It helps users streamline the process of charging sales taxes much better than before.
You may set up your Shopify store in Canada to automatically control the tax rates you pay for your customers. Keep in mind that Shopify will neither remit nor submit your taxes on your behalf. They assist you in ensuring that your firm has the proper tax arrangements in place.
Shopify Selling Outside the US and Canada
Merchants who are located outside of the US and Canada must use Shopify’s default settings. To begin, you should decide whether or not you need to charge tax sales to your consumers.
As well, you need to find out if your product is taxable. You must also specify the rates in the location where you deliver your goods.
The Ins and Outs of Shopify Sales Tax
There’s a lot to consider with Shopify sales tax, no matter which region of the world you do business.
The best advice to make the most of your merchant selling is to hire a Shopify accountant to deal with all your tax issues in a professional manner. Then you can put all your focus on the business operations. Did you find this article helpful? If you did, please consider checking out our blog for more knowledge, advice, and tips.
