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Setting Up Sales Tax on Shopify

If you're a small business owner looking to move your shop online, one of the hottest platforms these days is Shopify. More than 100,000 business owners have chosen to use Shopify as their online store solution. Of course, for all online sellers, sales tax is an important consideration. We wanted to take a few minutes to help you understand how sales tax collection is set up on Shopify.

Add a Shipping Location

The first step in setting up sales tax in Shopify is to add a shipping location. To do this, you'll first want to log into your Shopify account and navigate from your Admin dashboard to your Shipping dashboard by clicking on the 'Shipping' link in the menu on the left side of page.

Shopify Dashboard

Once you have navigated to the Shipping dashboard, click "Add a Country" to add a country you plan to ship your products to.

Shopify Shipping

Enter the country name in the text box pop up. To complete, click, "Add county".

Shopify Shipping Modal

Setting Tax Rates

Once you have successfully added a country to your Shipping dashboard, click on 'Taxes' in the menu on the left side of the page.

Shopify Shipping Dashboard

Once you've arrived at the Taxes dashboard, you will want to set the tax rate for the shipping location you added in earlier. Click the country and you'll see the 'Edit Tax Rates' popup. You can now add location where your company has a physical presence (a common way for sales tax nexus to be triggered) by typing it into the 'Add a physical presence' text field or by typing in a zip code. Finally, Shopify offers users in the United States the ability to have taxes calculated automatically via the Shopify US tax calculator. This option is selected by default.

Edit Shopify Tax Rates

Turning On Sales Tax

As a final step, you'll need to decide whether or not to include sales tax in the price of the product you are selling and whether you will be charging taxes on shipping rates.

Shopify Tax Dashboard

When you're done, click on ‘Save changes'. Congratulations! You've just set up your taxes on Shopify.

Avalara Author
Ryan O'Donnell
Avalara Author Ryan O'Donnell