Setting up US taxes

Note

This guide is for merchants who sell in the United States. It's your responsibility to consult with local tax authorities or a tax professional to verify that you charge your customers the correct tax rates, and to ensure you file and remit your taxes correctly.

If you're new to Shopify, then before you start selling, you need to determine whether you should charge sales tax. You might need to register with various tax agencies. After that, you can set up your taxes in Shopify to help ensure that you charge the correct rates wherever you sell in the United States.

Note

If you're already selling on Shopify, then refer to Using the new US taxes feature instead.

Before you begin

Before you add tax registrations in your admin at Settings > Taxes and duties, review the following considerations.

Determine whether you need to charge sales tax

You need to determine whether you should charge sales tax. If you're not sure, then consult with a US state tax authorities or a tax professional.

For a summary of state tax rules, refer to US taxes reference.

Register with your tax agencies

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 State tax reference.

Manage your locations

To ensure that your tax rates are correct, create a location for your business if your inventory is fulfilled from a location that's different from the address you have set in your Shopify admin at Settings > Store details.

Note

If the address that you set in the Address section in your Shopify admin at Settings > Store details is different from the address that you set as a location, then the location address is used to determine nexus. The Store details address isn't used if you have created a location.

Set up the regions in which you're registered

After you've registered with the tax agencies and have your sales tax ID, you can set up your taxes.

Steps:

1. In your Shopify admin, go to Settings > Taxes and duties.
2. In the Manage sales tax collection section, click United States.
3. In the Regions you're collecting in section, click Collect sales tax.
4. Select a state or region in which you are registered.
5. In Sales tax ID, enter your sales tax ID. If you have applied for a sales tax ID but don't yet have one, then leave this field blank. You can update it when you receive your sales tax ID.
6. Optional: If your business is located in a state where tax laws regarding shipping vary, then you can choose whether you want to charge tax on shipping.
   1. Click Advanced options.
   2. Under Shipping tax, choose whether you want to apply shipping tax.
7. Click Collect sales tax.
8. Optional: Add more regions and account numbers by clicking Collect sales tax.

Advanced options

Some states have laws that affect whether shipping is taxable. If you're registered to charge tax in California, Colorado, Florida, Illinois, Louisiana, Maine, or Maryland, then you can choose one of the following options:

• When applicable (default) - Whether the tax collected is determined automatically. If the state doesn't collect tax on shipping but does collect tax on shipping and handling, then tax is collected only if handling fees are added to the cost of shipping.
• Always - Tax is always charged on shipping.
• Never - Tax is never charged 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 US state tax authorities or a local tax professional.

Next steps

You can create tax overrides for products where the default tax rates don't apply, or shipping rates for specific states.