{"id":12117,"date":"2023-07-31T22:08:11","date_gmt":"2023-07-31T19:08:11","guid":{"rendered":"https:\/\/adoric.com\/blog\/?p=12117"},"modified":"2023-07-31T22:08:11","modified_gmt":"2023-07-31T19:08:11","slug":"10-tips-for-managing-taxes-on-shopify","status":"publish","type":"post","link":"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/","title":{"rendered":"10 Tips for Managing Taxes on Shopify"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Before 2018, e-commerce businesses were not subjected to pay tax. But with an ever-growing industry currently valued at <\/span><a target=\"_blank\" href=\"https:\/\/www.statista.com\/statistics\/379046\/worldwide-retail-e-commerce-sales\"><span style=\"font-weight: 400;\">6.3 trillion dollars<\/span><\/a><span style=\"font-weight: 400;\">, stakeholders realized the need to make online retail businesses pay a fair share of tax as contemporary brick-and-mortar stores do.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a Shopify business owner, tax payments are inevitable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you wish to keep selling on Shopify without attracting fines due to tax negligence, you must pay attention to your liable taxes and learn how to manage them.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this guide, you will learn about the vital Shopify taxes to pay and how to manage your taxes on Shopify.\u00a0<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#What_Taxes_Do_Shopify_Sellers_Pay\" title=\"What Taxes Do Shopify Sellers Pay?\">What Taxes Do Shopify Sellers Pay?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#Sales_Tax\" title=\"Sales Tax\">Sales Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#Value_Added_Tax_VAT\" title=\"Value Added Tax (VAT)\">Value Added Tax (VAT)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#Goods_and_Services_Tax_GST\" title=\"Goods and Services Tax (GST)\">Goods and Services Tax (GST)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#Income_Tax\" title=\"Income Tax\">Income Tax<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#10_Tips_for_Managing_Taxes_on_Shopify\" title=\"10 Tips for Managing Taxes on Shopify\">10 Tips for Managing Taxes on Shopify<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#1_Learn_the_Financial_Terminology\" title=\"1. Learn the Financial Terminology\u00a0\">1. Learn the Financial Terminology\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#2_Understand_your_Shopify_Tax_Obligations\" title=\"2. Understand your Shopify Tax Obligations\">2. Understand your Shopify Tax Obligations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#3_Determine_your_Tax_Nexus\" title=\"3. Determine your Tax Nexus\">3. Determine your Tax Nexus<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#4_Configure_Tax_Settings_in_your_Shopify_Store\" title=\"4. Configure Tax Settings in your Shopify Store\">4. Configure Tax Settings in your Shopify Store<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#5_Collect_and_Remit_Sales_Tax\" title=\"5. Collect and Remit Sales Tax\">5. Collect and Remit Sales Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#6_Obtain_Tax_Exemption_Certificates\" title=\"6. Obtain Tax Exemption Certificates\">6. Obtain Tax Exemption Certificates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#7_Consider_International_Tax_Obligations\" title=\"7. Consider International Tax Obligations\">7. Consider International Tax Obligations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#8_Keep_Accurate_Records\" title=\"8. Keep Accurate Records\">8. Keep Accurate Records<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#9_Use_Account_Software\" title=\"9. Use Account Software\">9. Use Account Software<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#10_Consult_With_a_Tax_Professional\" title=\"10. Consult With a Tax Professional\">10. Consult With a Tax Professional<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-tips-for-managing-taxes-on-shopify\/#Manage_Your_Shopify_Tax\" title=\"Manage Your Shopify Tax\">Manage Your Shopify Tax<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_Taxes_Do_Shopify_Sellers_Pay\"><\/span><span style=\"font-weight: 400;\">What Taxes Do Shopify Sellers Pay?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Everyone pays taxes. As a Shopify business owner, there are a few compulsory taxes to pay:<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Sales_Tax\"><\/span><span style=\"font-weight: 400;\">Sales Tax<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Sales tax is a simple one-off tax sellers charge consumers when they purchase a product. The tax is added to the product before or after checkout, and the consumer pays for it. Sales tax moves from consumers to the seller, then to the government.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sales tax is binding on businesses within the US. The rate for each product may vary depending on the state and local government policy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For safety purposes, get familiar with the binding tax policies within your business\u2019s jurisdiction.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Value_Added_Tax_VAT\"><\/span><span style=\"font-weight: 400;\">Value Added Tax (VAT)<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Value-added tax (VAT), as the name implies, is a tax added to the value of a product at every step until it reaches the final consumers. It\u2019s a flexible rate that depends on the value of a product when manufactured.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The manufacturer adds it before selling it to the distributors. The distributor does the same before selling to retailers, and retailers repeat the process when selling to the final consumers.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To remit your annual VAT, you need to sum up all VATs collected over the season and ship it to the government. VAT is relevant in all countries.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Goods_and_Services_Tax_GST\"><\/span><span style=\"font-weight: 400;\">Goods and Services Tax (GST)<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The key difference between GST and VAT is that GST is a flat-rate percentage taxed on every product.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">GST is charged at every food chain level until it reaches the final consumer. However, everyone gets a refund through tax credits except the final consumer. GST is applicable in all countries of the world.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Income_Tax\"><\/span><span style=\"font-weight: 400;\">Income Tax<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Income tax is a tax both salary earners and business owners pay on their income. Online Sales Tax, VAT, and GST are refundable, while income taxes are non-refundable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For salary earners, income tax is deducted before they get paid, while business owners pay income tax from their sales profit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For Shopify businesses, income tax is calculated after deducting expenses incurred running the business. This could include Shopify subscription, marketing costs, business trips, Sales Tax, VAT, and GST. You can reduce your income tax through tax-deductible expenses, which is why knowing what is deductible is vital.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To stay ahead of the curve, it\u2019s crucial to know how to manage taxes on Shopify. We shall now review a step-wise approach to perfecting tax management.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"10_Tips_for_Managing_Taxes_on_Shopify\"><\/span><span style=\"font-weight: 400;\">10 Tips for Managing Taxes on Shopify<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are some tips to help you effectively navigate Shopify tax management:<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Learn_the_Financial_Terminology\"><\/span><span style=\"font-weight: 400;\">1. Learn the Financial Terminology\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The world of finance, like other industries, has its jargon. One of the first steps you must take when starting a business is to learn the terminologies associated with the industry.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Familiarity with the jargon relieves you of the accompanying frustration many businesses face when preparing a tax report.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some of the common terms you need to know.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Income statement:<\/b><span style=\"font-weight: 400;\"> this shows a company\u2019s business activities including operating costs, profit, losses, and more.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Revenue:<\/b><span style=\"font-weight: 400;\"> this refers to the amount of money generated through sales.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Cost of goods sold (COGS):<\/b><span style=\"font-weight: 400;\"> this is the overhead cost of manufacturing the products (for manufacturers) or the cost of purchasing the products sold to the end users (for retailers).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Return on Investment:<\/b><span style=\"font-weight: 400;\"> this is a metric that determines how much your business generates with respect to the cost of goods sold and operational costs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Gross profit:<\/b><span style=\"font-weight: 400;\"> the amount left after deducting COGS from revenue.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Net profit:<\/b><span style=\"font-weight: 400;\"> the amount of money left after deducting COGS and other costs of running the business<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"2_Understand_your_Shopify_Tax_Obligations\"><\/span><span style=\"font-weight: 400;\">2. Understand your Shopify Tax Obligations<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignnone wp-image-12122 size-large lazyload\" data-src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-683x1024.jpg\" alt=\"Image showing how to manage taxes on Shopify.\" width=\"640\" height=\"960\" data-srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-683x1024.jpg 683w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-200x300.jpg 200w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-768x1152.jpg 768w\" data-sizes=\"(max-width: 640px) 100vw, 640px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 640px; --smush-placeholder-aspect-ratio: 640\/960;\" \/><noscript><img decoding=\"async\" loading=\"lazy\" class=\"alignnone wp-image-12122 size-large\" src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-683x1024.jpg\" alt=\"Image showing how to manage taxes on Shopify.\" width=\"640\" height=\"960\" srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-683x1024.jpg 683w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-200x300.jpg 200w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image3-768x1152.jpg 768w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/noscript><\/p>\n<p><span style=\"font-weight: 400;\">Tax laws and policies vary depending on the country, state\/province, and city. Familiarize\u00a0 yourself with the tax policies in your jurisdiction to know what taxes to pay and what to avoid.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conduct in-depth research and study to better understand these laws and how they function to avoid running on assumptions, which are bad for business.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Determine_your_Tax_Nexus\"><\/span><span style=\"font-weight: 400;\">3. Determine your Tax Nexus<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A tax nexus is a jurisdiction where your business has a significant presence and is liable to collect and remit sales tax. An online store can have more than one jurisdiction.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A tax nexus can include the country, state\/province, or city where your business is registered, where you generate most sales, where you have a physical presence (e.g., office, warehouse), or where your employees are located.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Identifying your tax nexus(es) enables you to know your tax rate. You can then comply with tax laws and policies binding on your business.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Configure_Tax_Settings_in_your_Shopify_Store\"><\/span><span style=\"font-weight: 400;\">4. Configure Tax Settings in your Shopify Store<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When you sell a product on your Shopify store, you need to deduct taxes for each sale. If your business operates within the US, your tax rates will always vary. Knowing your tax rate will help you configure your Shopify tax settings accurately.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Shopify built-in tax settings help you automate tax calculations and collection. Visit the &#8220;Taxes&#8221; section through your Shopify admin dashboard and set up the appropriate tax rates for your region.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Follow the steps below to configure the tax settings in your Shopify.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">From the Shopify admin, go to settings and select <\/span><b>Taxes and duties<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Select your<\/span><b> country or region<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">From the <\/span><b>Sales tax section<\/b><span style=\"font-weight: 400;\">, click on <\/span><b>Collect sales tax<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Enter your <\/span><b>Tax number<\/b><span style=\"font-weight: 400;\"> in the designated space. If you are yet to get one, leave it blank.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Click on <\/span><b>Collect Tax<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Click <\/span><b>Collect sales tax<\/b><span style=\"font-weight: 400;\"> if you want to add more regions<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Note that you can create an override for products where the default tax rates do not apply.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Collect_and_Remit_Sales_Tax\"><\/span><span style=\"font-weight: 400;\">5. Collect and Remit Sales Tax<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter wp-image-12120 size-full lazyload\" data-src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1.jpg\" alt=\"\" width=\"1333\" height=\"1999\" data-srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1.jpg 1333w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-200x300.jpg 200w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-683x1024.jpg 683w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-768x1152.jpg 768w\" data-sizes=\"(max-width: 1333px) 100vw, 1333px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1333px; --smush-placeholder-aspect-ratio: 1333\/1999;\" \/><noscript><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter wp-image-12120 size-full\" src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1.jpg\" alt=\"\" width=\"1333\" height=\"1999\" srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1.jpg 1333w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-200x300.jpg 200w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-683x1024.jpg 683w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image1-1-768x1152.jpg 768w\" sizes=\"(max-width: 1333px) 100vw, 1333px\" \/><\/noscript><\/p>\n<p><span style=\"font-weight: 400;\">After configuring your Shopify tax settings, the next step is to collect and remit sales taxes. Enabling automatic tax calculation in your Shopify store ensures you collect accurate tax at checkout.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Shopify will calculate taxes based on the rates you&#8217;ve configured. Review and update tax rates regularly when necessary. Keep track of collected taxes to facilitate accurate reporting and remittance when the tax season comes.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"6_Obtain_Tax_Exemption_Certificates\"><\/span><span style=\"font-weight: 400;\">6. Obtain Tax Exemption Certificates<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If your business caters to businesses exempted from paying sales tax, you also need to avoid incurring sales tax. One way to resolve this is to obtain tax exemption certificates.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For instance, if you sell to distributors, wholesalers, or resellers, these categories of customers are not expected to pay sales tax. And they often have an exemption certificate.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Request and store copies of the exemption certificates as proof when applying for tax deductibles. Shopify provides options that let you add customer exemptions to ensure proper handling of tax-exempt sales.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"7_Consider_International_Tax_Obligations\"><\/span><span style=\"font-weight: 400;\">7. Consider International Tax Obligations<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If your Shopify business caters to the international market, you are obligated to pay tax but only after you hit the tax threshold in a region.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is a specific amount of sales that signifies when businesses must start paying taxes. Once your business hits the mark, get ready for the tax season.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Every country or region has varying thresholds for e-commerce businesses. Research and understand the tax requirements of each country you ship to. This will help you know how to calculate your tax and when to pay.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"8_Keep_Accurate_Records\"><\/span><span style=\"font-weight: 400;\">8. Keep Accurate Records<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignnone wp-image-12121 size-full lazyload\" data-src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2.png\" alt=\"Managing taxes on Shopify - calculation and steps.\" width=\"1280\" height=\"1280\" data-srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2.png 1280w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-300x300.png 300w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-150x150.png 150w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-768x768.png 768w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/1280;\" \/><noscript><img decoding=\"async\" loading=\"lazy\" class=\"alignnone wp-image-12121 size-full\" src=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2.png\" alt=\"Managing taxes on Shopify - calculation and steps.\" width=\"1280\" height=\"1280\" srcset=\"https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2.png 1280w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-300x300.png 300w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-150x150.png 150w, https:\/\/adoric.com\/blog\/wp-content\/uploads\/2023\/07\/image2-2-768x768.png 768w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/noscript><\/p>\n<p><span style=\"font-weight: 400;\">Keeping an accurate record of your business transactions will simplify your Shopify tax remittance process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Maintain detailed records of all your purchases, sales, receipts, invoices, taxes collected, and other expenses. Many businesses, especially small-scale retail ones, neglect this aspect of their business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can use accounting software or Shopify&#8217;s built-in reporting tool to generate sales and tax reports. These records will be invaluable if you face an audit.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"9_Use_Account_Software\"><\/span><span style=\"font-weight: 400;\">9. Use Account Software<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If you just started a Shopify business, using a spreadsheet or the Shopify default reporting tool to manage your finances and taxes may be all you need. But as your business scales, they become less efficient.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You want to prevent avoidable errors bound to happen with spreadsheets. Accounting software comes handy here. Accounting software is the holy grail for efficient bookkeeping. It helps you save time and effort while generating accurate reports.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Shopify app store has a handful of these apps that can get the job done. But here is a list of our <\/span><a target=\"_blank\" href=\"https:\/\/adoric.com\/blog\/10-best-shopify-accounting-apps\/\"><span style=\"font-weight: 400;\">top ten account software for you<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"10_Consult_With_a_Tax_Professional\"><\/span><span style=\"font-weight: 400;\">10. Consult With a Tax Professional<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Tax laws can be complex. Managing taxes on Shopify without proper knowledge of what is involved can be daunting. You can either make out time to learn all there is to know about taxes or consult a professional. The former, due to its exhaustive nature, is hardly an option.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Seeking guidance from a tax professional is your best bet if you wish to get your Shopify tax management right.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They can help you navigate international tax complexities. You\u2019ll understand your specific tax obligations. They\u2019ll ensure compliance and provide personalized advice tailored to your business.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Manage_Your_Shopify_Tax\"><\/span><span style=\"font-weight: 400;\">Manage Your Shopify Tax<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Managing taxes on Shopify is undoubtedly daunting. Apply the tips in this guide to figure out the best way to manage your Shopify tax.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Since tax remittance requires you hit a certain threshold, you only get to pay tax when you make more sales. <\/span><a target=\"_blank\" href=\"https:\/\/adoric.com\/\"><span style=\"font-weight: 400;\">Adoric<\/span><\/a><span style=\"font-weight: 400;\"> can help you increase your conversion by turning your website visitors into paying customers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Learn how<\/span><a target=\"_blank\" href=\"https:\/\/adoric.com\/shopify-adoric\"><span style=\"font-weight: 400;\"> Adoric changes the sales experience<\/span><\/a><span style=\"font-weight: 400;\"> for Shopify owners.<\/span><\/p>\n<p style=\"text-align: center;\"><a target=\"_blank\" href=\"https:\/\/adoric.com\/shopify-adoric?utm_source=adoric&amp;utm_medium=blog&amp;utm_campaign=bottom_click\" rel=\"noopener\" class=\"big-button shopify-cta-button\">Add Adoric App<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before 2018, e-commerce businesses were not subjected to pay tax. But with an ever-growing industry currently valued at 6.3 trillion<\/p>\n","protected":false},"author":67,"featured_media":12119,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[32],"tags":[62,61],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.11 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>10 Tips for Managing Taxes on Shopify - Adoric Blog<\/title>\n<meta name=\"description\" content=\"To stay ahead of the curve, it\u2019s crucial to figure out business taxes. 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