Sales Tax Boot Camp for Shopify Sellers

SALES TAX BOOT CAMP FOR SHOPIFY SELLERS

Your Guide to Getting Sales Tax Compliantwith LIZZY GREENBURG

Put a lid on sales tax.

GOALS

• Cover some tax basics• Connect sales tax to Shopify• Share next steps• Resources for help in the future• Questions!! (use the chat section to the left)

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QUICK INTRO:

• Passion: using tech to solve problems for small business!

• Shopify Seller since 2011

• CA and TX Sales Tax payer since 2004

• Not a CPA or tax professional• Talked to thousands of online

sellers, pros, auditors, states

• Here to help you make informed decisions

WHO WE TALK WITH EVERY DAY

• People making a living online• Multi-channel sellers• Want to be educated• Trying to determine where they have nexus• Sales tax is being collected in different accounts• Filing returns is a frustrating, waste of time


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“I want sales tax to go away!”

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– Average TaxJar Customer

SALES TAX BASICS


CHAOS PREVAILS

• No federal laws or governing body (yet)

• 45 states (and DC) = 46 sets of laws• Nexus• Taxability• Rates• Due dates


WHAT’S TAXABLE?

• Tangible items are taxable• Common exceptions are clothing and food

• Services are mostly not taxable• Are the tides changing?

• Shipping, gift wrapping can be taxable


PASS-THROUGH TAX

• Pay what you collect

• Never pay out of pocket!

• Sellers are ‘collection agents’


AUTOMATE!

Starting is the hardest part


WHAT THE HECK IS NEXUS?


NEXUS IS WHEN/WHY YOU CARE


A presence / connection in a state that’s significant enough for you to be

required to comply with their sales tax law

WHAT’S THE RIGHT TIME TO COLLECT SALES TAX?


GOLDEN RULE OF COLLECTION

Collect sales tax when the item sold is shipped to a state where you have nexus


MEET JOE SELLER

• Based in Akron, OH

• Only has nexus in OH

• Complying in 1 state

Akron, OH Lakewood, OH

Collect sales tax

NEXUS SALE

Collect sales tax

REMOTE SALE

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Boston, MAAkron, OH

Copyright © 2015 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc.

HOW MUCH SALES TAXSHOULD I COLLECT?


COLLECTION LOGIC: SOURCING

• State where item is shipped determines tax rate

• Tax rate usually = sum of applicable rates• State• Local• Other (i.e., education, transportation)


ORIGIN VS. DESTINATION SOURCING

• Origin-based state• Tax rate = seller’s location• One rate for entire state

• Destination-based state• Tax rate = where item is shipped• Variable rate


Copyright © 2015 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc.Copyright © 2015 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 37

RUNNING A SHOPIFY STORE& SALES TAX

TAX COLLECTION IN SHOPIFY

• Shopify has a free tax collection service• Can collect in multiple states• Tax collection is based on zip code

• To activate, go to SETTINGS > TAXES > TAX RATES• Enter your location’s city and zip• Be sure to collect in every state you have nexus


RECOMMENDED SETTINGS• Select “I want to specify taxes automatically.”

• Separate sales tax from the cost of the item

• (If outside the US) You can select ‘charge taxes on shipping’ where applicable

• Set your tax overrides• Treat clothing and food differently• Avoid collecting tax when you don’t have to• You can even specify a tax rate by ‘collection’


If You’re selling multi-channel on Amazon...• YOU have to enable collection in Seller Central

• Amazon will NOT tell sellers• How to collect in FBA states (TaxJar will)• Where to collect (TaxJar will)

• Easy to collect ‘wrong’• Collecting only state tax in a destination-based state



FILING RETURNS

Copyright © 2015 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc.

HOW OFTEN DO I FILE?

● Filing deadlines usually tied to sales volume• The more you collect, the more often you pay

● Frequencies: annual, semi-annual, quarterly, monthly

● Deadlines typically fall on 15-30th of the month


FILING TO THE STATES

• Combine and file a single return per state• Not separate returns per channel

• File zero returns!• When you’ve collected $0 in sales tax


PAY ON TIME = $$

Some states have discountsfor on-time payment

• Generally between 1-2%• It’s free money!


PAY MORE IF YOU’RE LATE

All states have penalties for late payment

• Booo!• Late payment charges• Interest on what wasn’t paid


FILING IN DESTINATION STATES• Huge pain!

• States rely on you to divide up the money collected

• Calculate taxable sales & sales tax collected by jurisdiction

• Gets worse if you’re multi-channel


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HOW ARE YOU FEELING?


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WHAT DO I DO NOW?


Head-in-the-sand is not an option

Best effort > no effort

Don’t drain your resources trying to comply

HOW DO I GET STARTED?


START COLLECTING AT HOME

1. Comply in your home state• Register for a sales tax license• Enable sales tax collection• Pay and file

2. Think about your nexus...


WHAT ARE YOUR SALES & TAXES COLLECTED BY STATE?

HOW MUCH SALES TAX DID YOU COLLECT BY JURISDICTION?


WHERE DO YOU HAVE NEXUS?

Thousands of happy customers, including...


Helpful resources

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youtube.com/taxjarFor visual learners

salestaxcommunity.comTalk with 5,000 other store owners and tax pros!

blog.taxjar.comContent just for ecommerce & sales tax

CALL US!

855-800-6681


• 30-day free trial (no credit card required)

• Monthly or annual subscriptions

• Pricing based on transaction volume

• Starts at $19/month for 1k transactions

• $19.95 per AutoFile return


Start a FREE 30-Day trial


WE LOVE QUESTIONS!

WHAT ARE YOUR SALES & TAXES COLLECTED BY STATE?

Sales Tax Boot Camp for Shopify Sellers

Education

Transcript of Sales Tax Boot Camp for Shopify Sellers