How To Setup Sales Tax In Your Shopify Store (2024) Shopify Tax Setup

How to set up sales tax in your Shopify store

Hey guys, welcome back. In this video, I'll be showing you how you can get started with setting up sales taxes in your Shopify store

So let's get into it. Now, the first thing you need to know whenever you're looking to get started with building your Shopify store

is that taxes can be a really important segment. And building your taxes is really difficult, especially if you're located in the United States

The reason for that is because taxes so very important. It really depends on state to state, who you're liable to, what kind of tax you're paying

So that can be a lot to keep track of. And we're going to show you guys exactly how to do that

Now, for most other regions, most countries have a standardized tax amount, a standardized tax, that is the sales tax

For some, it might be 18%, for some it might be 15%, whatever it might be

So if you are going to apply sales taxes in a different region, I would just recommend you can include a certain percentage amount by going into your settings

You can go into your taxes and duties and just set up that particular tax amount

So you can see charge that charge tax on shipping rates and you can just add those taxes

Now, for the United States, it's going to be a little different. So if you're looking to set up taxes in a region that has variable taxes, you're going to go into your settings on the bottom left

Once you're in your settings, you can scroll down and go into taxes and duties

Now, in taxes and duties, you're going to have all of your countries present. So within any country, you can click on that particular country, and then you will have your current tax service

So we are currently using Shopify tax. And over here, you can actually go ahead and see how to go

collect taxes so you have some basic information like your tax collection tax rates and

exemptions and then your liabilities and the states that you collecting in now obviously for the first section you are going to have to get started with collecting taxes Now you do have to register for collection in certain states

So if you open up the U.S. state area, if I'm selling in Hawaii versus Nevada versus South Carolina

all of that is going to have different taxes. So over here, you can see it has local taxes

Then depending on the sourcing, what kind of tax do I pay? So if my warehouse is located in North Dakota

then I will have to pay the North Dakota tax on sourcing rather than the Ohio tax

However, at North Dakota, if any product is shipped in North Dakota, even if my warehouse is located elsewhere in the United States

I would have to pay the destination tax. So these rules and laws are going to be a little tricky

So you're going to click on start collecting over here, and you can start adding the state that you're collecting sales tax in

So you will have to do this on your own. You're going to add your particular state and then the sales tax ID

So when you are going to enter your sales tax ID, you can collect sales tax over here

Obviously, this is just a sample ID, but you're going to click on collect sales tax

And you're just going to open this link of taxes in Alaska. And then you will see over here, you have local taxes and sourcing taxes

And you will see over there that you need to register with the local jurisdictions

that you're selling into and charge destination taxes. So you guys can see in there sourcing the only tax origin taxing

Arizona has a single system for registering and filing taxes, and taxpayers are required to file and pay for all tax jurisdictions

including the city of Phoenix to the state. So you can go on ahead and open up the particular page for tax liability in Arizona

This will lead you to the Sales Tax Institute, so you can better understand the taxation

laws within that particular state because those are going to be really variable

Now once you add your particular state you can start adding more so you can click on collect sales tax Then you can add the next state that you in

So let's say it's Texas. Then you're going to add your sales tax ID

But even if you know it, you can just add your states the ones that you're selling in even if you haven't registered yet

Now, below that, you have tax rates and exceptions. So your products are going to be subject to a special tax, depending

on what category they are. So you can click on managed categories over here and you can add the categories

like this. These kinds of products don't have a lot of taxation variability. However, other products

maybe larger products like furniture, maybe luxury goods, those type of items might have variable

taxation laws. So if you're selling something that's like over $10,000, obviously the taxation

laws for that probably will be different because it's going to be a luxury good. Now after that, you

have some shipping overrides where you can set custom tax rates for shipping destinations

So let's say for Texas, the tax rate that I'm going to be charging, the sales tax is going

to be 10%. You can add this override manually. So if the Shopify Help Center has not updated

any tax laws, or if you see any state over here and you feel like as if you're not certain

about the tax rate and you find different conflicting information, you can always add your shipping

overrides. Then you can also add shipping overrides in the situation that if you are shipping

across the nation, if you're shipping to the other side, then you might want to charge a higher

tax rate simply because of your shipping costs. Now, you can always add a higher shipping cost to that

I don't recommend you actually increase the tax on that. But depending on your origin destination

you might have to pay more taxes to a particular state. Now you also have product overrides where you can

set custom tax rates for a certain collection of products now this is especially applicable for

luxury goods present within your store so if you have any luxury goods that are day goods but however are marked as luxury goods so you going to have to add product overrides for those as well

now on the top you guys will see your regions that you're collecting in and then above that you can

see and monitor your liability so action required monitoring required no action required

you will be able to see all of your tax liabilities whenever you get orders so if i just place my own

order over here just to show you guys all products and I'll place a order for this product over here

I'll order like 30 of them. Buy it now. Like this, I will click on complete order. And once your order

has been processed, so once you start receiving orders, what you're going to find is you will see

this is just a sample order, but it has estimated taxes. So the estimated taxes on this particular

order was $56. So this is going to automatically add your taxes. So the Shopify app will

automatically add your taxes. And now after that, you can go back into your settings and go into

your taxes and duties just to take a look at what your taxes are looking like. So if I go on

back into the United States, we can actually see the tax liabilities that you might have. So if you're

liable for any kind of tax that you have not given as of yet and you can click on monitor your

liability currently we don't have any liabilities required because our shopify application automatically

included those taxes so i hope you guys found this video helpful if you did make sure to leave

a like and subscribe to our youtube channel and if you have any questions or queries about

access, Shopify and how you can set up your Shopify store. Make sure to check out our other videos

where we talk about how you can change background, customize your code, and so much more on Shopify

So if you found this helpful, make sure to leave a like and I will catch you guys in the next video