In this article, you will learn:
One typical question for Shopify owners is setting Shopify POS taxes. Adjusting Shopify POS sales tax is easy and allows you to charge accurate sales tax rates on products sold to customers across multiple locations.
Shopify POS app is a point-of-sale app that allows Shopify store owners like you to sell their products in person from a brick-and-mortar store, pop-ups, or markets.
The POS app connects with your Shopify store and keeps track of product inventory across your online stores, physical stores, and other sales channels.
You can view and manage orders, add and manage products and customers across stores in multiple locations, set locations where you want to sell your products and seek the highest level of sales tax compliance with Shopify Tax and registration-based tax settings.
Various features such as sales tax liability insights, automatic rate calculations using product categories, rooftop accuracy, and advanced tax reports help you to charge sales tax on your sales accurately.
Don’t know how to start with Shopify POS tax? Don’t worry as in this article we will cover how you can adjust sales tax in Shopify POS step-by-step.
How to Set Up Tax Rate For New POS Location?
Before you set up Shopify POS taxes, you must know that:
- Shopify POS app applies taxes based on the store location that you assign to your POS device.
- You first need to set up tax regions on your Shopify App.
- You can set up multiple locations to use Shopify POS to track orders and inventory across your retail locations
- The store locations you choose must be included in your shipping zones so that the taxes are calculated correctly. A shipping zone refers to a group of countries or regions with the same shipping rates.
- Any tax overrides or tax exemptions that you set for a shipping zone apply to Shopify POS locations within that zone.
Once you consider all the above points, you can set up tax rates new POS location by following the steps below:
I. Ensure That Location Is In the Shipping Zone
The first step in setting up Shopify POS taxes for a new location is to ensure that the new location is included in your shipping zones. This is despite whether you ship your products or not.
For instance, if you run only Shopify POS for your retail outlets and do not have a Shopify eCommerce store, then also you need to ensure that your location is included in your shipping zones. This is important for the accurate calculation of taxes.
II. Set Shopify POS Taxes Rate
Once you ensure that the new location is included in your shipping zones, the next step is to set the tax rate for that new location in POS.
To set the Shopify POS taxes rate for the new location in POS, log in to your Shopify admin account.
Once you log in, go to “Settings”. Under the “Settings” tab, select “Taxes and Duties”.
Once you click on “Taxes and Duties”, you will see the taxes and duties page of your Shopify account. On this page, you will see sections like “Manage Sales Tax Collection”, “Duties and Import Taxes”, and “Decide How Tax is Charged”.
Then, under “Manage Sales Tax Collection” select the country where your POS is located in.
Once you click on the specific country, you will see the taxes page of the specific country that you have chosen. On this page, there are various sections like Current Tax Service, Manage Tax Collection, Regions You Are Collecting Tax In, Tax Rates and Exemptions, Shipping Overrides, Product Overrides, and Tax Reporting. Go to the “Manage Tax Collection” section.
Under the “Manage Tax Collection” section, click the “Start Collecting” button to set the states or regions where you want to collect sales tax. Say, the country that you have selected is the US and one of the states where you want to collect sales tax is California.
Once you click on the start collecting button, the “collect sales tax” popup will open. In this popup, there are two dialog boxes: “State” and “State Tax ID”. Under the “State” box, enter the state where your new POS location is and under the “State Tax ID”, enter the tax ID of that state. By doing this, you will automatically set the tax rate for the state in which you have your new POS.
Note that if you have your new POS location in the United States, you can choose either automatic tax settings or you can manually specify the rates for state, county, and municipal taxes, including shipping taxes. However, if you are not in the US, you can either use the default values or manually specify the rates for countries and their regions. Besides this, you also need to specify whether you will charge taxes on shipping.
III. Add New Store Location
Then, you need to add this new store location as a location in your Shopify Admin.
Let’s first see what a location is, how you can add a new location, and then understand how this new location is included in your shipping zone.
What is a Location?
A location is a physical place or an app where you sell products, ship or fulfill orders, and keep inventory. Accordingly, a location can be an online store, a retail outlet, a warehouse, a drop shipper, or a pop-up.
You may use various applications to physically stock inventory for you. These applications could be third-party logistics services, a warehouse that fulfills orders on your behalf, custom-fulfillment services, or drop shipping applications.
All these applications stocking inventory on your behalf would be treated as locations but would not add to the location limit allowed for your Shopify subscription plan.
Now that we know what a location is, let’s see how can we add a location in Shopify.
How to Add a Location in Shopify?
1. Open Shopify admin using your email and password details
2. Once you have access to your Shopify dashboard, go to Settings.
Then click ‘Locations’.
3. Click ‘Add Location’.
4. Put in the unique name and address for the location. Check the box against ‘Fulfill Online Orders From This Location’ in case you want the inventory from this location to be available for online purchases
5. Click ‘Save’.
As mentioned earlier, you must ensure that your new location is included in your ‘Shipping Zones’ to calculate the sales tax accurately. And you can add countries and regions to a shipping zone only if these countries or regions are included or belong to a ‘Market’.
Creating ‘Markets’ in Shopify helps you manage your brand. You can assign a variety of settings to a group of regions and locations that come under a particular market.
A Market can be a single country or region or a group of countries or regions that share a common group of settings.
For instance, if you get maximum sales from China, Japan, Thailand, Singapore, and Hong Kong, you can add all these countries under one Market under the name ‘Asia’.
IV. Assign Your POS Device To New Store Location
Once you add the new store location as a location in your Shopify admin, the next step is to assign your Shopify POS device to the new location for setting up Shopify POS taxes.
Note that you can manage your device locations directly in the Shopify POS app. Also, you can enable limited staff permissions to give restricted access to the location settings on the iPad.
Always remember to select your location whenever you install the Shopify POS app on a device. This is to ensure that the correct tax rates are applied.
Now to assign your Shopify POS device to the new location, follow the steps below:
1. Go to your Shopify POS app and then select “Settings”.
2. After clicking “Settings”, click “Location”.
3. Under location, select the name of the new POS location. Say, for instance, it is San Francisco.
4. Tap Switch to confirm the change or Cancel go back.
Now, in your Shopify POS App, there can be a possibility that the new location does not show up. In such a scenario, you need to put the app in the background.
To do that, press the home button on your device. Then, open the Shopify POS app again and your new location should be available.
How To Adjust Tax Rates in Shopify POS Cart?
As mentioned earlier, the Shopify POS app applies taxes based on the store location that you assign to your device. There can be a scenario wherein you need to change the tax rate for your Shopify POS location.
Well, you can change the Shopify POS taxes rate for your location in your Shopify Admin itself by following the procedure mentioned above.
But there can be a case wherein the tax rates for a particular POS location for different products are different from the ones set in your Shopify Admin account.
Note that when you add products to the cart, Shopify POS applies the tax rates for the location that’s assigned to the POS device. If you want to adjust the tax rates in the Shopify POS app itself for all the items in the cart, you can do so by switching tax rates on or off for all items in the order in the cart.
To turn cart tax rates on or off for all items in order:
- Go to the home page of your Shopify POS app and then click ‘Taxes’ in your cart.
- Next, deactivate or activate any tax rates for your order and then click ‘Close’.
Likewise, when you add products to the cart, the Shopify POS application applies the tax rates for the location that’s assigned to the POS device.
If you want to adjust the tax rates in the Shopify POS app itself for a single item in the cart, you can do so by switching tax rates on or off for all items in the order in the cart.
To turn a tax rate on or off for a single product in an order:
- Go to the home page of your Shopify POS app and click “an item” in your cart.
- Next, deactivate or activate any tax rates for the item and click “Save”.