🤷 How to Avoid Sales Tax on Shopify
If you’re running a shop on Shopify, you may wonder how to avoid sales tax. Here are a few tips to help you out:
1. Set up your shop as a business. This will make you responsible for paying sales tax.
2. Register your shop with the state you’re in. This will give you information on sales tax rates and other tax requirements.
3. Use tax-exempt tools to reduce your tax burden. These tools can help you declare your income tax-exempt, lowering your tax burden.
4. Consult with a tax specialist to learn more about how to avoid sales tax on Shopify. They can advise you on the best ways to reduce your tax burden.
🔰 Introduction
Sales tax is one of the most important considerations when starting an online store. In the United States, sales tax is governed by each state, which can make things complicated for entrepreneurs who are just getting started.
However, if you use Shopify as your eCommerce platform, you can avoid sales tax headaches by using the built-in sales tax features.
In this article, we’ll show you how to configure sales tax in Shopify and give you some tips on how to stay compliant.
❓ What is Sales Tax?
The government imposes a sales tax on selling goods and services.
The amount of tax imposed depends on the state where the sale occurs. In some states, sales tax is imposed on the purchase price of the item, while in others, it is imposed on the shipping and handling charges.
Sales tax is generally imposed on all transactions, regardless of whether the buyer or seller is in the state where the sale occurs. However, some states have agreements with other states that allow for sales tax to be collected only on transactions within the state.
🤷 How to Avoid Sales Tax on Shopify
Sales tax is one of the most important considerations for any online business. Not only can it be a significant expense, but it can also be a complex and confusing topic. Fortunately, you can take a few simple steps to help reduce the sales tax you owe on your Shopify store.
1. Use tax-exempt status 📜
You may be eligible for tax-exempt status if you are a registered non-profit organization. This means you would not have to pay sales tax on purchases from your Shopify store.
You must submit a completed application to your state tax agency to apply for tax-exempt status.
2. Use a tax-free shipping method 📦
Some shipping methods, such as US Postal Service Priority Mail, are exempt from sales tax.
This means that you would only be responsible for paying sales tax on the cost of the items you sell and not the shipping charges.
Select a tax-free shipping method when setting up your Shopify store to take advantage of this.
3. Use a tax-free payment processor 💵
Certain payment processors, such as PayPal, do not charge sales tax on transactions.
This means that you would only be responsible for paying sales tax on the cost of the items you sell and not on the transaction fees.
Select a tax-free payment processor when setting up your Shopify store to take advantage of this.
4. Use a tax-free shopping cart 🛒
Some shopping carts, such as Shopify’s own, are exempt from sales tax.
This means that you would only be responsible for paying sales tax on the cost of the items you sell and not on the transaction fees.
Select a tax-free shopping cart when setting up your Shopify store to take advantage of this.
5. Use a tax-free checkout 🛍
Certain checkout services, like Shopify’s own, do not charge sales tax on transactions.
This means that you would only be responsible for paying sales tax on the cost of the items you sell and not on the transaction fees.
To take advantage of this, select a tax-free checkout service when
🤔 Conclusion
Sales tax can be complex and confusing, especially when starting in ecommerce. Fortunately, you can take a few simple steps to ensure you’re collecting and remitting the correct sales tax amount.
First, make sure you have a good understanding of the basics of sales tax. You should know which jurisdictions you must collect tax in and the applicable tax rates. You should also know any sales tax exemptions that may apply to your products or services.
Once you understand the basics, you can use a sales tax automation tool to help you manage your sales tax obligations. A good sales tax automation tool will help you calculate the correct tax rates for each jurisdiction and file and remit your taxes on time.
Finally, keep good records of your sales tax compliance. This will help you in the event of an audit and give you a good understanding of your business’s sales tax liability.
