how to get tax information from shopify

Shopify sales tax setup for stress-free compliance | Walk-through guideHi, Shopify sellers. This is

LedgerGurus

Updated on Jan 23,2023

Shopify sales tax setup for stress-free compliance | Walk-through guide

Hi, Shopify sellers. This is Kexin from LedgerGurus.,And today I'm gonna talk to you about sales tax settings in your Shopify store.,I know this is not the most exciting topic,,and it's just another admin task to add to your list. But trust me,,if you can set this up correctly,,then you are on a really good path to be compliant with sales tax,,and you don't have to pay much out of your pocket.,So before we dive into the content,,if you haven't done so please subscribe to our channel and hit that bell,,so when we get new videos published, you will get notified.,So at LedgerGurus,,we help so many e-commerce clients with their e-commerce accounting and journal,entries and transaction coding and bank reconciliations. But at the same time,,we also have a dedicated sales tax team that manage,everything that's relating to sales tax for these customers.,So I'm in Shopify all the time,,and I do these sales tax settings for my clients day in and day out.,So this is really my arena to share my experience with you guys. Please,comment if you have any questions and we'll be sure to get back to you,on those questions. So, today I'm gonna talk about two things.,The first is how does sales tax work with Shopify?,Who's collecting it? Is Shopify like Amazon?,And then the second part is I'm gonna walk you through the things you need to,make sure you finish setting up on your Shopify store to be sales tax,compliant. So to answer the first question,,we get lots of inquiries on,what's Shopify? How does Shopify deal with sales tax?,And the answer is Shopify is not like Amazon or Etsy or Walmart or another,marketplace facilitator,,where you can just hand over the responsibility to,them for, to collect and to remit tax to the different states.,If you are selling on Shopify,,every sale that goes through Shopify is your responsibility to collect,and remit sales tax. So Shopify's not gonna do it for you.,You have to do it yourself.,Shopify's not gonna turn on those settings for you automatically.,You have to turn them on yourself.,So then let's talk about how to turn on those settings.,There are five things that,,over the years of my struggle with Shopify, that I've figured out.,So I hope that this is really helpful to you guys.,So,,the first thing is to enter the places you want Shopify to collect sales tax in.,So you would go to settings and you go to Taxes and then you go to US,store. And then that's where you can add all the states.,If you are one of the older Shopify users, you need to add a zip code.,If you are using the new interface, which I really like,,then you don't have to enter the zip code.,You just need to enter your sales tax license and then the,state. And, then sometimes it asks you which way of sourcing you want.,So we can talk about sourcing another time.,So that's the first thing is you need to tell Shopify where to collect tax.,The second thing is after step one, if you go back out of US,,if you go to settings and then taxes, if you scroll down,,so it's below all the different countries,,you can see a box that says automatically calculate tax on shipping.,Some states charge shipping, some states don't.,So you would need to check this box, so,Shopify will calculate tax on shipping. And then for the states that you,know, are not taxing shipping,,you need to go in and add a tax override for shipping in that,specific state.,The third thing is you want to make sure all your taxable products are,collecting sales tax. So to do this,,you need to go to your products and go to each products. You,can edit each variant and then somewhere in the middle,,there's a box that says charge tax on this product.,You want to check that for the products you that are taxable,,some products are not taxable, for example, gift cards. Those are not taxable.,So you would not check the box for those products.,Then the fourth thing is you want to add all your locations in from where the,fulfillments are going through.,So your warehouses that are fulfilling these orders that are,sold through your Shopify store. So you would go to settings and locations.,And at all of those...The reason that this is important for sales tax is because,some states are origin sourcing. Some states are destination sourcing.,So depending on where the goods are shipped from,,if it's an intra-state, transaction,,meaning if it's shipped from the state to a customer in the same state versus,shipped from one state to another state,,the rates are very different and where to look for those rates are different.,So it's important to put the location of your warehouse there.,And the last thing is exempt customers. If you sell to,exempt entities, or if you sell to,like wholesalers that are gonna use your products for resale,,then those are all legitimate reasons to exempt sales tax for certain,customers.,And thus you would go to customers and you go edit this customer's information,and you check the box to say, this is an exempt customer.,And you can also give a reason on why this is exempt.,So to just summarize - five places, first,,you need to tell Shopify where to collect sales tax.,Then you need to configure shipping options. And then third,,you need to make sure your products are all collecting tax for the,taxable products. And fourth, you need to add locations of your warehouses.,And the last thing is to add information for your exempt customers.,Let me know if you have any questions,,feel free to leave comments and for sure to get back to them.,If you like this video, please like it.,Share it with your fellow Shopify users.,Hope you all have a good day and I'll see you soon. Bye.

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Taxes for Shopify Store Owners

Taxes for Shopify Store Owners

taxes they are not fun but they are a,very important part of e-commerce,because you need to be collecting sales,tax for different orders,and you'll also have taxes that you need,to pay to your own government,so in this video we are going to go over,the different taxes,for small businesses and how to make,sure that you are,staying within the law for all of that,and paying on time,okay so since we are talking about taxes,let's start out with a huge disclaimer,for this video,that i am not a tax accountant i am not,a cpa,i have no certification for talking,about taxes,i am just talking as an e-commerce,entrepreneur,and a small business owner myself and,i've been paying taxes for over 11 years,for my small business,so i'm talking from my perspective here,so make sure that you still,contact a tax accountant in your area,and you,verify everything with them to make sure,that everything is,set up correctly and that you are paying,your taxes correctly,okay so now that that's out of the way i,want to talk about the different types,of,taxes that you have to pay whenever,you're doing an e-commerce store,so first off you do have sales tax that,you need to collect,and this is going to be depending on,where your location is and what country,so i'm going to have this video talking,specifically about,the us so it's going to be different,depending on the country that you're in,or that you're selling in however in the,u.s you need to be collecting,sales tax anytime you have a physical,location,in a state so that could be that your,office is in,one state and your fulfillment center is,in another state,you would need to be collecting sales,tax in both of those states because you,then technically have a physical,presence in both states,you also have to do sales tax,collections based off of an,economic nexus so there are different,requirements for different states based,on if you have so many transactions,in a state or if you have a certain,dollar amount that you have sold online,in the state,so this can get a little bit confusing,so we'll go over the best way to do that,in just a minute,but this is a newer tax thing that has,been added in the last few years,that you want to make sure if you're,doing a higher volume of e-commerce,sales online,that you're being really mindful of so,first off when you're setting up,charging sales tax by a,physical store location you can do this,inside of the shopify backend,so you would just go to settings and,then taxes and you can add in your tax,location there so you would add in your,zip code,so it'll add in the correct tax,information,based on the state that your physical,location is in,so this is an important one to make sure,that you have set up so that it's just,calculating taxes,overall based on the physical location,but as i mentioned before you also need,to keep in mind the economic nexus,so this is different for each individual,state which can be a little frustrating,since the us has so many states to keep,up with,and shopify really isn't set up for,going through and keeping track of all,this information,plus shopify does not file any taxes for,you,it's just charging the customer and it,is on you,and your responsibility to make sure,that you are setting aside that money,for taxes,and paying that correctly to each,individual state,so for this i really recommend a,third-party app called,tax jar so tax jar lets you actually,see the economic nexus so you can see,how much,you are getting close to that of needing,to collect sales tax in particular,states,so it'll keep track of how many,transactions you've had in a state,how much revenue you've brought in in a,state,so it's really helpful for keeping track,of all of that information,so that you don't have to have a huge,spreadsheet that you're constantly,updating with every new order also with,the tax share app they do,automatically file taxes for you once,you've got that set up so once you have,registered that you need to file sales,tax in a state you can then put all that,information into tax jar,and get that set up so it's a lot easier,for you especially if you end up having,to file taxes in a lot of states,based on your online orders and revenue,so i definitely recommend,taking a look at tax jar if you are,expecting a high volume of orders,and you are expecting to have more,things that you're qualifying for in,terms of different states that you're,needing to pay taxes on,i'll put a link to it in the description,below but definitely an,app to check out so that's just the,sales tax portion of it all though you,as an individual,will have to pay taxes on any income,that you have received from your,business,so this is going to depend a lot based,on how you have your business set up,if you are set up as a sole proprietor,so as an individual,if you are an llc a single member llc,an s corp a c corp however you have set,up your business entity,that really depends on how the taxes,that you are having to pay,are structured out so i'm not going to,get into all of that again make sure to,reach out to a tax accountant and make,sure that you're,paying the correct taxes for you but,overall you need to pay taxes on any,income that you have received from the,business,so you can write off things like,expenses so your cost of goods of any,kind of,cost of actually shipping out the or,fulfilling the product itself of the,shipping cost,any marketing costs like paid,advertising or if you've hired,independent contractors to do designs,for you you can,deduct all of those as expenses from the,business account,and you don't have to pay any taxes on,that income that is there,also any income that you leave inside of,the business for,future months of running expenses you,don't have to pay any,income tax on that as well it's just the,money that you're taking,out personally as profit from the,business and again,that does vary really wildly based on,the,entity structure that you have set up,for your business,so overall you just want to make sure,that you are reaching out to a tax,professional in your area,and that you have everything set up the,last thing that you want,is to be hit with a huge tax bill that,you weren't expecting and you don't have,the money set aside for,that one's gonna hurt really bad and,it's going to,hamper your business growth if you're,then having to take additional money,from the business,or from your own personal accounts to,pay off taxes that you hadn't prepared,to pay for,so you want to just make sure that,you're thinking ahead and setting aside,whatever money that you're collecting,for,taxes whether it be sales tax or income,tax that you're going to pay,personally so i hope this video was,helpful for you,in deciphering a little bit more about,the different taxes,that you have to pay for a small,business and for e-commerce stores,we've got a couple more videos over here,all about growth strategies so how to,actually grow your shopify,store for 2021 and if you haven't yet,subscribed to this channel make sure to,hit that subscribe button below,we post videos every week all about,shopify and how to grow your online,store

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