As an e-commerce business owner, taxes are an annoying, albeit typical part of daily life. And now, with Shopify’s latest launch, Shopify Tax, managing your taxes for your business is easier and faster than ever before, offering you more precision and control over your finances.
Two of the most significant pain points when managing sales tax for your business are identifying where your company is liable and calculating and collecting tax. Shopify Tax is an end-to-end centralized solution that enables you to manage your taxes from one place directly from your Shopify admin.
What Are the Benefits of Shopify Tax?
Identify liabilities in different states
Determining where your business is liable can be challenging and frustrating, not to mention time-consuming. After the Dakota vs Wayfair Supreme Court decision of 2018, companies with more revenue from a specific state or that had a certain number of transactions now have an “economic nexus” in that state. This means they are then liable to tax collection as if they had a brick-and-mortar store in that state. It can be tricky to determine your sales tax, especially when every state differs in its guidelines and what constitutes an economic nexus in their state.
With Shopify Tax, you can use sales tax insights to determine your liability in different states and determine if your revenues are reaching a certain threshold that would make you subject to collecting sales tax in that state.
Determine tax rates with sharper accuracy
Now you won’t have to worry about how tax rates apply to your customer’s address because Shopify will analyze the state tax jurisdictions to help determine the exact tax rate you are liable for.
Categorize products by their tax rate
It can also be challenging to determine the correct tax rates to collect for different products you sell. Shopify makes this process easier with product categorization, recommending product categories for your business that best fit your products and automatically determining the tax rate you would be subject to for a product in that category.
Be alerted to tax rate changes
To make matters even more confusing, tax rates can also change and it can be a headache to keep track of these changes. With Shopify Tax, once your products have been categorized, dealing with tax rate updates is out of your hands and Shopify will manage them for you. In addition, you will be alerted of any other vital information regarding tax changes that you should pay attention to so you can plan accordingly.
Easily integrate with third-party apps
Need to integrate Shopify Tax with other e-commerce tax apps? No problem. As an end-to-end solution, Shopify Tax smoothly complies with other third-party e-commerce apps.
How Does Shopify Tax Work?
You will not be subject to collecting tax until your store exceeds $100k in sales. And once you have exceeded $100k you will be subject to a competitive 0.35% fee or 0.25% for Plus merchants.
Easily access sales tax insights and product categorization to learn more about your tax liabilities, thresholds, and tax rate changes anytime, directly from your Shopify admin.
Explore Shopify Tax to learn more about all the new enhancements and features.
Which Businesses Can Use Shopify Tax?
These new Shopify Tax features will first be available to Shopify merchants who sell in the United States, and will be rolled out in the coming weeks. Shopify’s goal is to eventually expand Shopify Tax internationally.
Grow With The Snow Agency
Managing tax is one side of the equation when it comes to operating a business – the other of course, is making the sales in the first place. If you are looking to take your performance to new levels of success, partner with the digital marketing experts at The Snow Agency.The Snow Agency is proud to be a Shopify Plus certified partner and we have helped scale Shopify businesses of all shapes, sizes and verticals, generating over $300 million in GMV. Reach out for a free consultation today.