Shopify business owners are required to pay taxes on products or services sold through their Shopify store. They need a Tax Identification Number (TIN) to provide tax ID numbers on documents sent to the IRS and state tax departments.
Before setting up taxes, set up the regions registered in. After registering with authorities and getting a tax number, set up taxes. Perform this one time. From Shopify admin, go to Settings > Taxes and duties. In Manage sales tax collection, click country or region. Click Collect sales tax. In Tax number, enter tax number. If no number yet, leave blank.
Do You Need a Tax ID to Sell on Shopify?
Once you start selling on Shopify, it’s important to set up tax collection and remittance. Shopify offers an easy way to collect sales tax, and tools like TaxJar can help automate sales tax compliance. You should comply with sales tax laws.
In most cases, you won’t need a tax ID to sell on Shopify. However, if you sell physical goods to US customers, you may need to obtain a tax ID from the IRS and apply for an Employer Identification Number (EIN) online. If you sell taxable items, you’ll need to apply for a tax ID from your state.
Shopify doesn’t require a tax ID to run your business. This allows store owners to test their business plan and interact with customers. If successful, the owner can get the tax ID they need.
Can You Sell on Shopify without Tax?
It depends on your business location and products sold. Check with an accountant to determine tax requirements.
You can use Shopify’s Basic Tax or Manual Tax services. These offer lower automated compliance and require more work to update rates and monitor changes. This could increase liability in US jurisdictions.
Additionally, sales below certain thresholds may be exempt from tax collection. Set up tax settings properly to ensure correct collection. Obtain necessary sales tax permits. Following these guidelines avoids issues and keeps you compliant. With the right approach, you can successfully manage taxes on your Shopify store.