Shopify Not Charging Taxes

Shopify Tax: A Comprehensive Guide for Shopify Sellers


Meet Veronica Wask, the founder of Five Minute Bookkeeping, dedicated to assisting Shopify sellers in setting up, organizing, and streamlining their financial systems. In this article, we'll delve into the crucial aspects of the Shopify Tax Service, exploring its functionality, associated fees, and whether it's the right fit for you.

Understanding Shopify Tax

Shopify Tax enables automatic sales tax collection within the Shopify platform. To implement it, sellers must configure the service for each state where they have physical or economic nexus in the United States. Not familiar with Nexus? Veronica offers linked videos for further clarification.

Transition to Paid Service

Previously free, Shopify Tax became a paid service starting January 15, 2023. Merchants were automatically upgraded after this date, and fees now apply to users of the service.

Fee Structure

Shopify Tax fees are applicable only to online orders, excluding point-of-sale transactions. For U.S. sales up to $100,000 annually, the service is free. Beyond this threshold, fees apply at 0.35%, or 0.25% for Shopify Plus merchants. The charges are incurred only for sales in states where tax collection is enabled, with a cap at 99 cents per transaction and $5,000 per year.

Illustrative Examples

Veronica provides examples from Shopify's website to illustrate the fee structure. Whether selling a $30 t-shirt or a $20,000 rug, the fees are outlined, giving sellers a clear understanding of how Shopify Tax impacts their transactions.

Invoicing and Transparency

Fees for Shopify Tax are reflected on the Shopify subscription invoice. Importantly, the calculation is based on the total transaction amount, inclusive of taxes and shipping, providing transparency for merchants.

Is Shopify Tax Right for You?

Veronica recommends using Shopify Tax if you're not employing a third-party service for sales tax management, are concerned about sales taxes, lack a sales tax professional, and seek higher accuracy and automation in tax calculations. Conversely, if you already use an external service or work with a professional using a different tool, Shopify Tax may not be the best choice.

Engage in the Conversation

Veronica encourages readers to share their experiences with Shopify Tax in the comments section. Are you currently using Shopify Tax? What are your thoughts on its functionality?

Connect with Veronica Wask

For those ready to work with an experienced Shopify accounting pro, Veronica provides details in the description. Additionally, she invites readers to subscribe, ring the bell, and explore her resources, including a free Shopify bookkeeping blueprint and access to her Facebook community.

Conclusion

Veronica Wask's insightful guide navigates Shopify sellers through the intricacies of Shopify Tax, offering clarity on fees, functionality, and suitability for individual business needs. Whether you're a seasoned merchant or just starting, this article equips you with the knowledge to make informed decisions about managing your sales tax on the Shopify platform.

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