Shopify reports ecommerce revenue in America will grow 46% to 2023. You’ll need to pay taxes with these stores.
Here’s how to create a Shopify sales tax report. Shopify doesn’t file your taxes for you. It’s important to register your business with the proper government authority. Include these reports when you file your taxes.
You’ll need to sit down and work through a few steps to get this right. There are regulations as a merchant and one of them is tax reporting. These are unique for different countries.
In The USA
Here’s the bottom line. You need to fill out forms for the IRS if you have more than $20,000 in sales with more than 200 transactions. Ecommerce shops need to pay too. Last year the Supreme Court required online sellers to collect sales tax. The Nexus is the connection that makes it necessary.
Setting Up Rates for a Shopify Sales Tax Report
There’s a manual and automatic tax setting for the U.S. Make sure you have an American store address in a US shipping zone for the manual one. After that, follow your Shopify Admin to Settings and Taxes. Uncheck the Calculate Taxes Automatically button.
There’s a Base Taxes section where you can pick the rates for each state the you sell to.
Charging tax for a Shopify sales tax report can be complicated in America. Rates might apply to the state, municipal and county level. Sellers in this position can opt for Shopify’s automatic settings.
Just go through the same process you did for the manual version. Click calculate taxes automatically instead.
Another Factor for That Shopify Sales Tax Report
If you are selling to American buyers, there is another factor to consider. It is called the destination basis and origin basis. The phrase might sound a little daunting, but it isn’t.
Here’s a rundown of what you’ll need to know.
The destination basis is simple. You use the sales tax rate in the state where the product or service gets delivered. The other factor determines sales tax on what part of the country the seller is located in.
It’s important to get this rate for your tax calculations. If you get stuck you can use the ZIP Code for your customers shipping address or your store’s location.
Canadian sellers have an updated version of this feature. Click here.
Outside of North America?
Those tax rates need to be set properly for sellers outside of North America too. For example, if you’ve got European customers you might need to charge VAT. Start by going to the shipping page and adding shipping zones.
Accessing A Shopify Sales Tax Report
The Sales Finance Report is where everything comes together. You can access one of these by logging in here.
There’s a Tax Finance Report that you can get too. These will give your accountant a good overview of the taxes you’ve collected and your sales. You can select time frames on the tax report to show the taxes applied.
You need to keep your tax information updated. When you start Shopify payments, you can plugin your details including your tax ID. If you’re using a POS device, you need to assign a store location to it.