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

Hi Shopify sellers. This is Kexin from LedgerGurus, And today I'm gonna tok 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 tok 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 automatikally. You have to turn them on yourself. So then let's tok 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 tok 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 automatikally 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 thoseThe 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.

Everything You Need To Know About Shopify Dropshipping Taxes (2022)

[Music]. what's going on, guys? so there is so much confusion with drop shipping and taxes that most beginners, or even advanced drop shippers, have no idea how any of this works, and that's why i'm bringing on one of the most knowledgeable people in this field, who's been a tax expert for over 10 years, so i'm super excited to be sharing this information with you. um, give them a little introduction of who you are. hey guys, i'm chris rivera. i'm founder of a firm called the e-commerce accountant's name kind of says it all. uh, we're an accounting firm that specializes in online sellers. um, i throw around e-commerce very loosely, um, but mainly we deal with entrepreneurs that are in e-commerce. so i've been an accountant for 10 years, like you said, and i've been niche down in e-commerce for about four years- awesome, so yeah, guys. so i asked you on my instagram a few days ago on what questions you guys wanted to hear from him. so i have a bunch of really cool questions, but i also want to start off with him giving a little overview of what drop shipping taxes are, because i think people in general have a lot of confusion, whether you're a new entrepreneur or you don't know what's going down. chris is going to give you the lowdown on this. the way i like to break it down is into two separate categories. so, if you're an online seller, the risk is really centered around income taxes and sales taxes. so income taxes are name kind of says that all it's a tax based on your income or your profits- right, and we can dive into that in more detail if you'd like. and then sales taxes is something that is confusing to a lot of entrepreneurs, because it's actually not a tax that the entrepreneur tiknically pays. it's a tax that your customer pays. so if you're in the business of e-commerce, those are the two things in terms of taxes that you should really be focused on: income taxes and sales taxes, okay, cool. so i think one of the largest questions that i had- a lot of you guys asked this- is: when do you actually need to pay taxes as an e-commerce business owner? because most people are completely lost on this. a lot of entrepreneurs- not just e-commerce entrepreneurs, but entrepreneurs in general- think that april 15th is when you pay your taxes, which is definitely not true. april 15th is when you file your tax return, which tells the irs how much money you owe in taxes. basically, realistikally, how it's supposed to work is you're supposed to pay taxes quarterly or four times a year. uh, and the whole idea there is. you know, for those of you who have had a w-2 job before, when you get a paycheck, taxes are getting taken out of your paycheck and the irs is getting paid sporadically, bi-weekly, monthly, however often you're getting paid. but for you as an entrepreneur, if you're making 10 000 on shopify, let's say, taxes aren't getting withheld out of those payments, the irs is not getting paid. so the way that they counteract that is, they force you as an entrepreneur to pay taxes quarterly, which is, you know, every three months. you're supposed to stop, calculate your profits, estimated tax, pay it into the irs. and that's the main reason why i always tell entrepreneurs, you know, don't wait till tax season to hire a good accountant, wait till you're actually making substantial amounts of income, then hire someone to make sure that you mitigate your risk from a from a tax standpoint. absolutely, guys, you need to be listening to this because there is just so much confusion in this space and i think chris is really going to clear a lot up over here. so one thing that i think would be really beneficial to people watching this, because i know a lot of the viewers are primarily in the beginning stages. what piece of advice could you give to someone who's just getting into this field? they want to start making money but they're just not sure how this works like. what advice would you give them to make sure they're doing this properly? i'm a firm believer in when you're an entrepreneur, just focus on making money and the rest. as you become more and more successful, the rest will work itself out. uh, let's break this down into legally and tax wise. i'm not a lawyer by trade, but i know enough to kind of give some advice. i definitely recommend, in the beginning, getting an llc, because that at the very least, gives you uh, legal protection, but also it gives you the opportunity to structure to save money in taxes later on. so setting up an llc, i believe, is super, super important, and that goes for both american entrepreneurs but also non-american entrepreneurs as well. on the tax side of it, i think that in the beginning just focus on making money. you know it's taxes are very complex and professionals that specialize in giving tax advice are also very expensive. so in the beginning, just focus on making money and then, as soon as you have budget to pay a professional to help you mitigate or reduce risk for taxes? definitely do so. so, to break that down, you know 20 000 or more per year in sales. that's when i recommend that you hire an accountant to, at the very least, do your tax return. and then, once you're doing 30 000 or more per month in sales, that's when i recommend you hire someone to strategically help you tax plan. so what could people do at home right now to prepare, because obviously there's some actions that they could be doing themselves right. yeah, so i am a firm believer in having good data. so doing your own bookkeeping accounting in the beginning, it's safe. you know, i always tell entrepreneurs that as you're starting to scale up, don't undervalue the importance of bookkeeping, because bookkeeping gives you financial data which is super important to making decisions for your business, but also feeds directly into your tax return. i mean, i said before you know your income taxes are based on your income or your profits, right, and if your profits are wrong, you know your tax number is going to be wrong and that could be a very substantial amount, absolutely so my recommendation is, in the beginning, definitely focus on getting your accounting and bookkeeping in order, and that doesn't always necessarily mean outsourcing that work. but again, as you start to generate more and more substantial amounts of income, it becomes more of a high risk area. so, uh, in the beginning just focus on the data, the numbers, get book keeping, accounting in order and, uh, you know again, once you hit that 20 000 sales threshold in a year, hire a tax professional to help you, at the very least, report things correctly. absolutely okay, cool. so what company structure do you recommend for e-commerce businesses and at what stage? because you know, i know a lot of people are starting off with a sole proprietorship. like, what do you recommend for beginners doing this, or even more advanced people, and when should they consider the next approach? so, legally i, pretty much across the board, recommend having an llc for an e-commerce seller. now i see it all with you know people coming in the funnel saying, hey, another account told me a corporation or partnership or whatever for e-commerce. llc is the way to go, whether you're an american or a foreign entrepreneur, because the tax treatment of an llc is super flexible. you can literally submit a piece of paperwork into the irs saying, hey, i have an llc, but i want my tax treatment to be an s corp or a c4 or whatever. um, so llc is a really good idea, uh, in terms of your legal structure. now, the other thing i'd love to find- the person who, like, started this whole rumor or this trend in the space is. i get people all the time saying: you know, every single store i set up, i want to have a separate llc right, and while that does provide legal protection, the issue is that the space we're in- especially drop shippers or, i guess, e-commerce entrepreneurs in general- is it's transient in terms of the stories. you can have a store that does super well for six months. then it fizzles out. then you have a legal entity that's out there that you should resolve. you have to do tax return, you know, so it can get quite comp.

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Setup your Shopify Taxes Correctly (only 5 min!)

taxes can seem scary, I get it, but it doesn't have to be so. let's break it down real quick. when you're selling online, you need to collect sales tax for any item that you've sold. however, each state does it a little bit differently, which just makes it super confusing. so some states you only have to collect sales tax if you have a physical location there, like if your business headquarters is there or if your Warehouse is there that you're shipping the products out. of other states it's based off of a revenue threshold of how many sales you're making for products in that state, which is called an economic Nexus, and each state also has different levels of the threshold here. just to make it even more confusing, some states you don't have to collect sales tax on different types of products, like in New Jersey, you don't have to collect sales tax on clothing or Footwear. in California, you don't have to collect sales tax on food that is consumable. it can get really confusing, but, thank, hopefully there is a better way to manage it all and make sure that you don't end up with a huge unexpected tax bill. you used to have to manage all this individually with a third-party Shopify app or just your own bookkeeping team. but thankfully there is a new feature called Shopify tax. that makes it all a lot easier and all just in your Shopify backend area. so you want to make sure that you've actually opted in for this new feature of Shopify tax, because it is free for your first hundred thousand dollars in online sales and then after that is just a small fee to management. moving forward. so you can get to this area by going to your settings and your Shopify back-end and then taxes and duties, and you can then set up there which individual states you need to be collecting sales tax for and it'll start showcasing, based off of your thresholds, of how many sales you have in each state as well. so it'll notify you when you need to start collecting sales tax in a new state and start showcasing what tax that is, make sure it's charging it to the customers, as well as showing you what that is on the back end, so you can make sure that you are saving accordingly. a key feature in getting this to work correctly is making sure that your products are categorized correctly within Shopify, and you can find this area in the taxes and Duty section as well. but this way it helps Shopify know, based off of different states that charge taxes for different types of category of products. it'll let Shopify know what type of category your product is in and make sure it is charging the appropriate sales tax or not charging sales tax based off that. so you want to make sure that you go in and make sure all of your products are categorized correctly. so, just to make this even more confusing, this is just sales tax that I'm toking about right now. this is not income tax, which each state charges individually, or each country charges individually as well, and you'll have a federal income tax. so this is where it gets even more confusing and, honestly, I'm not an accountant, I'm just a web designer. so I highly recommend that you reach out to an accountant and get all this set up, because you do need to be paying an income tax for the state or federal level that you are in to make sure that you're paying taxes off the money that you've made from your business- again, not an accountant. so make sure you hire someone that can help you with all of this and and set everything up correctly from the very beginning- a book that I have found really helpful, and just setting up your business correctly is profit first. it really helps me understand kind of just how I need to set up different systems in my business, as well as how much money I need to save for operating expenses, taxes, all those things and, of course, paying myself as well. so I highly recommend this book if you're interested in more kind of business fundamentals behind the scenes information, and I'll put a link to it in the description below as well. I'll be honest, I actually made a huge mistake and did not set aside enough taxes in the first year of my business and it was a pretty uh bill. so do not make the same mistake. and if you want to see more lessons that I've learned along my entrepreneurship Journey over the last 12 years, then check out this video over here. I've got more tips and things that I recommend you doing and not doing as well to help you along the way.

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Shopify Tax How and When To Collect Sales Tax [NEW FEATURES]

All, everyone Christian here- did you know in the US alone, you need to ensure that you're properly collecting taxes across 46 states and 11,000 different jurisdictions, And if you don't, you have to pass, go and go directly to prison. Okay, That last bit was a little bit extreme. but let's tok about the super sexy topic of taxes. US sales tax is very complex and it can be discouraging for a lot of you folks out there. Now Shopify in the recent months have overhauled their tax features to make things a little bit smoother for merchants, And you might have already seen a little bit of this. but now they're actually giving it a proper name and it's called Shopify Tax. So what is Shopify tax? So Shopify tax puts sales tax insights and collection in your control and makes everything manageable from your Shopify admin. So at a glance you'll know when you're liable, with a state by state overview. It also reveals where you're approaching a tax threshold, so allowing your business to actually prepare for the taxes that are going to be coming. with Shopify tax, You can also apply the right taxes at the right time, with calculations based on the buyer's precise address. There's also known as workshop accuracy. Shopify takes care of all of this in the background, so you don't have to do a whole lot of things Now. they also make sure to collect the right taxes for the right products. So adding product categories is going to be an absolutely crucial part of the process of adding new products to your store, And we'll tok a little bit more about this here in a second. Now, before we move on, I just want to say my name is Christian Keenan, one of the co-founders here at that brand, or an e-commerce growth entity that specializes in helping clothing stores grow and scale profitably online. We do have new videos every week, so make sure that you hit that Describe button- Turn on notifications so you don't miss out. Now let's tok about pricing. Nothing in live is free, right. So Shopify tax is going to be a new service that automatikally gets added to your store and you cannot really turn it off Now. for the rest of 2022, you won't have to pay anything extra that size of what you're currently paying right now for your Shopify subscription. It is going to be free forever for the first $100,000 in US sales each calendar year. after the $100,000, a point 35% fee or 4.25% fee for plus merchants will apply for subsequent orders that calculate sales tax in the US online. also, as a promotion for the next year, 2023,, the total annual Shopify tax costs will be capped at $5,000.. Now, the only bad part is that this is just for Shopify plus stores, So anyone below there won't be a cap for next year. Now another question that you might be asking is: what about outside the US? While Shopify tax is built right now exclusively to manage your US sales tax obligations, hopefully in the future they will manage international and global taxes, But right now, it just seems like they're really harping on focusing on US sales tax obligations. I believe, from what I've read, that they want to become very an all encompassing platform. So adding taxes globally and managing that will probably be something that they add sometime in the future- Not even close, but sometime in the future. Now, managing numbers and data and all this stuff can be very cumbersome. Now I want to let you in a little secret. It's not tax related, but it's all an analytiks and metrics related right. We're using a tool called trivia wealth for all of our client and group coaching members, And this tool allows us to see the lifetime value of a customer at 30,, 60, 90 days, But we're also very excited about the estimated action of customers. So just a slight little feature in there. So imagine being able to send out email campaigns or ad campaigns to customers who are actually likely to buy from you a second or third time And knowing when to exactly send out these marketing messages. after the will of super, super powerful, it centralizes all of your metrics all into one place. They simplify, inform and save you time. So make sure to check out the link in the description below. There is a slight little discount code in there for you. If you want to try this, try out triple. Well, for the first time- now we've toked about a little bit of product Categorization is going to be very important moving forward. So let's tok about product categorization. So, is a hot dog distinguish? as a society, we may never agree on the answer. I believe Erin is in the camp of it's a sandwich. I don't think it's a sandwich. What do you? what do you think? Let us know down in the comments below If a hotdog is a sandwich at Shopify, they can help you categorize your hot dog, for tax purposes at least. So they may not have that answer, but they'll be able to help you categorize that. So, for example, if you live in New York, you may find that you pay a tax when you buy a hot dog from a local stand, but not when you buy a pack when you're doing your neighborhood barbecue. So in each state different rules of the amount of tax that needs to be charged will be different on a per product basis, right, or what you use the product for. So that's where smart categorization comes in And this new feature helps you figure out these rules when you add new products to your store And really the smart categorization based on the titles and the description of the actual product that you're putting in Shopify will automatikally recommend you a product category. So once you approve or modify, then it will automatikally assign a proper tax rate based on local regulations. So if you're adding shoes and you're typing in the product title that this is a Nike Air Force, whatever, and the description it toks about being a shoe, then the product category- you will see that it will showcase it's a shoe, right, And all you have to do is just approve it or potentially modify it Right, depending on on your store and what you have currently. And if you like what you see, please consider clicking on that like button. It really help us out at all One of my YouTube videos without an actual sprint reporting, Right? So let's jump in and kind of show you around a little bit of the tax and duties section. So right now, if you go to your settings and then you go to taxes and duties, you will see this brand new banner and here it will say: stay compliant in the US with Shopify tax. and you might actually see some notikes in here. So this one says you're not charging taxes on some product variance and this one says you may have sales tax liability in four different states. So all these things you need to make sure that you're checking inside of your admin settings, taxes and duties. I'm going to click on Review US tax settings here for the new Shopify Tax And in here you'll see like there's manage a tax collection, tax rate exemptions reporting, manage your tax collection. It will actually give you, like I said, a state by state breakdown of where you're actually liable for taxes or blur some of these things in here. So you know that and then categorize your products for tax purposes. So in here you see we have 1400 products that we need to review for this store. So again, it's time consuming process and you have toward the end of this year really to kind of figure all these things out, because it will start 2023. So it's very important that you have all these things figured out Now. when you manage categories here for the products, you will see right within here It will actually show you the products and it will give you the product category, So very quickly you can actually at a glance change things around And, like I said, obviously there's a smart categorization So it will automatikally tell you what that, what it thinks that product is. All you have to do is just approve, deny or modify it. All right, So there you have a Shopify tax. They're actually making it a lot simpler for you t.

How To Charge Taxes On Your Shopify Store | Easy Method

how do you charge sales tax on your shopify store, how do you pay your sales tax and all that stiky stuff coming up in today's video? hello, hello and welcome back to the channel. if you're new here and we don't know each other, you've never met me. my name is carrie, i'm the founder of shirt school and i created this channel to bring you the best strategy, secrets and hacks to grow your online t-shirt apparel or print-on-demand business, and in today's video, we're once again toking about my favorite thing in the world: taxes. if you're anything like me, taxes just give you a headache and they're just constantly frustrating and it just feels like i'm always paying taxes, so taxes really stink. but luckily, today we're going to specifically be toking about sales tax on your shopify store and i'm going to show you the easiest way that i've found to collect it and actually pay it to your state and how that all works. this is a question i get all the time like gotta be. one of the most asked questions is about sales tax and how to collect it, when to collect it and how to pay it- all that kind of stuff. so hopefully today i can bring some clarity to this question and help you out. the first thing i want you to know about sales tax is that you only pay sales tax on sales that you make inside your state. okay, that's one of the beauties that we have being an online business is that we don't just sell in our state, locally. we sell all over our country and maybe all over the world, and we don't have to pay sales tax on any sales outside of our state of residence. they call this sales tax nucleus, and so you have to pay taxes in any state in the united states where you have nucleus. now that basically means you just have to have like an office or some kind of residence there, right? so for most online businesses, especially small businesses, you're only going to have that nucleus in one state. wherever your business is located, even if you're running from your home, you're going to have to have a physical address, and so most likely for most of you, that's going to be inside your state only. to use amazon as an example, amazon has fulfillment centers and offices all around the united states, so amazon has to charge taxes in most states in the united states. that's why, even though amazon might be based in a certain place, they have, since they have facilities all over the us. they have to pay sales taxes on all the sales in those states, but luckily, since we have a small online business, you most likely only have that one location and so you're only going to pay sales tax on the sales that you make inside your state of residence. okay, the last thing i want to say- and then we'll get into the tutorial on actually how to set this all up in shopify- is that i've said it a lot and it's another question i get that's very related, and i recommend that you don't get your llc or your business licenses before you actually have some sales under your belt. right? i recommend that you get started on shopify without doing all of the the llc's and business licenses and sales tax permits. go ahead and get a few sales under your belt before you actually get your business license and you start paying your sales taxes. you want to make sure this is something that you want to continue with. so a lot of people really stress out when they're first starting and luckily you don't need to stress because you can actually claim: you know, put your under your social security number on your taxes. you can put your sales under there. you don't have to worry too much about sales tax when you're just starting out. but once you have some sales and you know that this is going to be something long-term for you and that you're going to stik with, you want to make sure you do get your llc, get your business license, get your sales tax permit and you start paying that sales tax each month. if you are just starting out, you're brand new and you're watching this video and you're like: i don't have my business license. okay, i recommend that you go ahead and set up sales tax in your shopify account so that you are collecting it. but go ahead and just set it aside. hold on to it, just in case you need to pay those sales taxes later. that's what i recommend. you don't necessarily have to do that, but even if you don't have your business license, i would just turn it on, collect it, put it aside, maybe in a separate account, so that you're not tempted to spend it, and just so you have it there in case you need to come back and pay those sales taxes. hey, if you're getting value out of this video, smash that like button and also make sure you subscribe to the channel and hit that bell icon. when you subscribe and hit the bell. you're gonna get notified each week when we put out videos. now, as much as i hate toking about taxes, i know you love hearing about it, so i plan to put out more videos related to this kind of content. so if you want to see that, make sure you subscribe back to the video. okay, jumping into shopify inside of uh test account that i have here. i want to let you know setting up sales tax in shopify is actually a very simple process. a lot of people get really scared of how to do this, and it's- it's actually pretty simple. so all that you want to do is go to your settings here and you're going to want to go to taxes right there, right, and so we have, uh, some different options here. you're welcome to look through these and see if you you want to use any of those options. what we're going to want to do here in the united states, we're going to want to go right here and hit setup. okay. now the great thing about shopify is, once you set this up, it's going to automatikally calculate all the sales tax for all the counties in your state and it's just going to do all the hard work for you. so you're going to hit this collect sales tax button and you're going to select your state of residence- and i will select oklahoma, right here- and then we're going to simply hit collect sales tax. okay, you don't have to put in your uh, your actual sales tax id. you can go ahead and start collecting it without that and put that in later, as you saw me do there. so after you've done that, that's it. that's all you have to do in shopify. so after this first step, your customer is going to have to pay the additional sales tax on any purchases that they make if they are inside of your state. this is not a big deal. if somebody, if you go down to the convenience store, you buy something, you're going to expect to pay sales tax. so here in oklahoma, for instance, if i have somebody joe down the street that buys something from my store and he's in oklahoma and i'm in oklahoma, he's going to expect to, say, pay sales tax. so once you've set this up, your store is already collecting sales tax. you don't have to do anything else on your shopify store to actually collect the money. i do want to make sure you understand that shopify will not pay your sales taxes for you. they are simply going to collect it from the customer and give it to you and it's just going to get lumped in with the revenue that you're making and you're collecting from your sales. so you're going to have to actually put it aside and not spend it, so that you have the money there to pay your sales tax. step number two: you're going to want to find where you pay sales taxes inside of your state. now, keep in mind: you only want to do this if you already have your llc, your business license and your sales tax permit. okay, you have to have that before you can do this. so make sure you get your business license, get your sales tax permit. then you're going to want to find where you pay taxes. okay, here in oklahoma, it's okay, tap. this is the website i know most of you guys aren't watching from oklahoma, but just to give you an idea of what this looks like. now, here in oklahoma, we have to remit our sales tax every single month by the 20th of the month for the previous month. so all you're going to want to do here is simply get your- uh, your account set up with whatever, whatever website for your st.

How To Charge Taxes On Your Shopify Store | Easy Method

in this video, i want to teach you how to set up your taxes settings, which is really, really easy. you're going to be able to do it very quickly. you may not even have to edit anything, because the default settings are very close to what my settings already looks like. so, to get to the taxes settings, you're going to click settings at the bottom left here, which will bring you to this page. then you're going to click taxes right here, which will bring you to the taxes settings. before you do that, however, go to your general settings and make sure you have a correct address in there. so, for example, i live in california, within the united states, so my address is california and in the united states. right, then go to your taxes settings. the reason i want you to set your address correctly is because taxes are calculated based on where you live. so i'm going to click taxes now and it's going to bring me to this page. okay, so for the most part, these are your default settings. please keep in mind that i live in the united states, so my taxes page looks like this. if you live in a different country, for example, if you live in mexico or you live in, say, somewhere in europe, then your page may look very different than mine, but for the most part, i think it should be the. the guidelines and concepts here should still apply to you, so let's take a dive in. so you got tax regions and tax calculations. the regions here are the regions for which you would tax if someone from that region came to your store and bought an item. so i'm in the us, i s, let's say, i sell t-shirts and someone else from the us comes to my store and buys one of my t-shirts because they're in the united states, they i would collect taxes when they buy that one product. you'll notike here that says the rest of the world, meaning everywhere outside of the united states, and it says not collecting. so generally, my settings do look like this. i want to point out that that for most countries, if you sell products, you're going to have to pay taxes in some form. in the us, it's very, very common for someone to buy a product online and then have taxes added to that product when they check out. the reason i don't collect taxes from people in other parts of the world is because i sell to a lot of people from all sorts of different countries and i don't know the culture for each country. i sell to some countries, you know they don't pay taxes on the products they buy, so i don't want to collect taxes from everybody, because if i, if i collect taxes from someone that's from a country where they don't generally pay taxes on products they buy online- they me- they may be very upset and i don't want to upset any of my customers. so, for the sake of not upsetting any of my customers, i simply don't collect taxes from any other countries. but i do collect taxes from people from the united states. you may be wondering: well, doesn't that mean you'll be losing money at the end of the year when i file my taxes? yes and no, although i don't collect taxes from the rest of the world, i set my prices, my profit margins, large enough and high enough so that i make such a large revenue on each product i sell that when i go to pay my taxes at the end of the year, i will have enough revenue to pay for those taxes and still make a profit. so if you're worried about how, if you're worried about making a profit and not collecting taxes, just make your price large enough to incorporate any taxes you'll have to pay back later. um to your government. okay, tax calculations. so earlier i said to make sure to set your pricing in the general settings. i'm sorry, set your address correctly in the general settings and that's because tax calculations are based off where you live. okay, so there's a couple options you can choose here. i don't, i don't check back, i don't check any of these things. the first one is: show all prices with tax included. what does that mean? this means that taxes are included in the prices when someone visits your online store. i never, ever, include the taxes in my prices because in the? u, the united states, it is not. that is not common practike generally. if you're, if you have online business and let's say, i sell t-shirts and i i sell each t-shirt for ten dollars, exactly. if someone were to come to my store and they saw the shirt for ten dollars and they put in their shopping cart and they went to go check it out and taxes were then added on top of that ten dollars, that customer would not be upset, because in the united states that is very common for taxes to be added on when you go to check out online. so it is very common in the united states to not include taxes in the visible prices of your store. taxes are always added when you check out later. uh, charge tax on shipping rates? uh, because we're drop shipping. i don't charge tax on shipping rates because you know we're drop shipping. we, we don't have to package up the product. we're not responsible for shipping. someone else is going to drop ship that product to the customer for us and we've already set profit margins and prices that incorporate that shipping. so i'm not really worried about taxing my customers for shipping rates. the less you could, the less you tax your customers, i feel, the more happy they will be, the more you know, because they're not going to get any price that's unexpected. the price that they see online will be close to the price that they'll see when they check out, and i think that's a good thing and it makes your customers happy. and then this last one you can ignore, because this is more for digital products and we're not selling digital products. so, like i mentioned, for the rest of the world, i do not collect taxes from them. so i don't. i just leave this as it is for the united states customers. i do collect taxes from united states customers. i'm going to click edit to go a little bit further, just to show you. but you don't really have to do anything in here. shopify already calculates taxes automatikally and they calculate it based on the address which you set up. in the general settings, which i mentioned a couple times already, i put, i put my address here as california and you'll see that the word the, the state california, shows up here, because this is where i live and my taxes are going to be calculated based on the fact that i live in california. if i lived in new york, which is a different state in the united states, then my taxes would be very different, because in the united states each state- california, new york, florida- they all have separate federal. they have, they all have separate, they all have separate state taxes. so in california, i guess, the state tax is 7.25 percent, um, so i just wanted to point that out, but that's pretty much it. it's very, very straightforward. you'll notike that i didn't really edit anything. if i wanted to, i could add a text for the rest of the world customers, but i'm not going to do that because, again, i don't know if it's common to tax people from every single country, because i'm i don't, i have not lived in every single country, so i don't know what the expectations are, so i'm just going to leave it as is. you could even remove taxes from the united states if you wanted to, to make your customers even happier, but i think it's pretty common in the us to pay for your taxes when you buy a product online, so i would just leave that and not worry about it. and there you go. now that you're charging taxes, at least in parts of the world, you're going to use that tax money to help pay off taxes at the end of the year and it's going to help you a lot. all right, guys, i hope that was useful. i'll see you on the next video. i almost forgot to mention another reason i'm not really worried about collecting taxes from the rest of the world is because most of my marketing channels- so, for example, my facebook advertising- they're all directed at the united states. generally, i market to united states customers. the reason i do that- and i'll get that, i'll get more to that during the marketing section- the reason i do that is because i'm f.