“Shopify and Sales Tax: What Every Small Business Owner Needs to Know”
Running your Shopify store is exciting; you’re building a brand, making sales, and connecting with customers all over the country (and maybe even the world). But one thing that trips up many small business owners? Sales Tax.
How Shopify Helps
Shopify has built-in tools to help calculate and collect sales tax. You can:
- Set up tax collection by state
- Automatically apply local sales tax rates
- See sales tax collected in your reports
But Shopify doesn’t file or remit taxes for you—that’s still on you as the store owner.
What You Need to Do
- Figure Out Where You Have Nexus
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- Physical presence? Employees? Inventory in a fulfillment center?
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- Hitting revenue/transaction thresholds in certain states?
- Register for a Sales Tax Permit
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- Don’t collect tax until you’re registered!
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- Most states allow online registration through their Department of Revenue.
- Configure Shopify to Collect Sales Tax
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- Go to Settings > Taxes and Duties
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- Add the states you’re registered in
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- Shopify will take it from there when taxes are calculated at checkout.
- File Sales Tax Returns
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- Usually monthly, quarterly, or annually, depending on your volume
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- File on time to avoid penalties
Common Pitfalls to Avoid
- Not registering when required
- Collecting tax before you’re registered
- Ignoring economic nexus thresholds
- Missing due dates for filing and remittance
Final Thoughts
Sales tax doesn’t have to be scary. You can stay compliant and confident with a solid understanding and the right tools in place. Remember—keeping up with sales tax rules is part of protecting your business as it grows.
Do you have questions about sales tax or need help setting it up in Shopify? Contact our office for more information.
About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.