Basic Tax
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About Basic Tax
The Basic Tax service is available for certain regions only. This guide applies to you if your store is based in one of the following regions:
- United States
- Canada
- European Union
- United Kingdom
- Norway
- Switzerland
- Australia
- New Zealand
- Singapore
The Basic Tax service requires you to input a tax registration number to calculate your taxes. You can get this number from your local tax authority.
Limitations of Basic Tax
The following features are not available in Basic Tax:
- Automatic rate calculations using product categories
- Automatic recommendations for product category
- Rooftop accuracy
- Support for state fees
- Tax holidays
- Tax liability insights
- Advanced reports
- Collecting tax in states with no state sales tax
If you require any of these features, then review the table of tax services to determine which tax service is best for your needs.
Before setting up taxes
If you're new to Shopify, then you need to determine whether you need to charge sales tax before you start selling. You might need to register with multiple tax agencies. After that, you can set up your taxes in Shopify to help ensure that you charge the correct rates.
Before you add tax registrations on Settings > Taxes and duties in your Shopify admin, review the following considerations:
- You need to determine whether to charge sales tax. If you're not sure, then consult with tax authorities or a tax professional. For a summary of state tax rules in the United States, refer to the US taxes reference.
- If you need to charge sales tax in one or more US jurisdictions, then you need to contact each of the relevant agencies and register with them. The process varies depending on where your business is based and where you sell, and on the individual government requirements. For links to various US tax agencies, refer to the state tax reference.
- If your inventory is fulfilled from a location that's different from the address that you set in your Shopify admin at Settings > General, then you need to create a location for your business to ensure that your taxes rates are correct. If the address that you set in Settings > General > Store details section of your Shopify admin is different from the address that you set as a location, then the location address is used to determine nexus, which is a physical or economic connection to a region. The Store details address isn't used if you have created a location.
Setting Up Basic Tax
Refer to the following resources regarding tax set-up:
- If you're new to Shopify, then refer to Setting up taxes.
- If you already use Shopify, then refer to Switching to Basic Tax service.
- If you want information about how Brexit affects your business, then refer to UK taxes and Brexit.
Shipping tax considerations
Some regions have laws that affect whether shipping is taxable. For example, if you're registered to charge tax in California, Colorado, Florida, Illinois, Louisiana, Maine, or Maryland, then you can choose whether to charge taxes on shipping.
If you're not sure whether you should charge taxes on shipping, then leave this option on the default setting and check with tax authorities or a local tax professional.
Managing Your Taxes
After you set up your tax regions, you can manage your tax settings including your registrations, tax overrides and exemptions, and tax calculations.
You can create tax overrides for products where the default tax rates don't apply, or shipping rates for specific regions.