Selling on Shopify? How to Set Up Sales Tax in 5 Easy Steps

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Live webinar took place on 06-28-2022 @ 01:00 PM EST
Shiloh Johnson, Speaker
Fran Gaither, Moderator

New to selling on Shopify? Or just now sure how tax plays into your sales? Join us for a FREE 30-minute webinar with Shiloh Johnson where she'll walk you through what you need to know to set up tax on your Shopify account correctly so you don't have to worry about penalties or fees.

We want to create a community around small businesses, so at the end of the talk, we’ll open it up to live questions from attendees. Tell us about you, your business & what you want to know!

Shiloh Johnson is a long-time CPA and founder of ComplYant, a technology platform offering business owners and entrepreneurs a simple way to manage tax rules and requirements.

Note: This topic covers U.S. businesses only. Any information provided during this panel is not intended to be taken as advice or to be perceived as a specific position on any subject of law or tax law.

Q&A

What can a new seller do to stay organized in those beginning stages? Are there any practical things that we can encourage?

There are a few things that you can do right now, right away. If you do not have a business bank account and you've been operating out of your personal account, the first thing you can do to help you get organized is to open up a business bank account and separate your funds. If you're operating like a side hustle and you don't wanna like legitimize it, I have news for you. Even if you're a side hustle, you're still a business, you're just operating it like a sole proprietor. You're still a business. You can get a DBA and that DBA will allow you to get a business bank account. Separate the way that you're spending money. Even if all you're doing is putting money in and you have not started making money, you still need to separate that, right? If you're your sole investor, you're putting your own money into this business, get a business bank account, and instead transfer the money that you're going to be spending on the business into that business account as an investment or loan to the business – separate the money. That is the number one thing I can suggest for practically getting organized.

Another thing that could help you is understanding your tax landscape, understanding what taxes you owe, where, and when. ComplYant can help with that. If you don't know that you have to get a business license in New York, then you're not gonna do that thing. And then you're gonna have a headache later. So, setting up a ComplYant account, and giving a clear understanding of what taxes you owe and where and when will help you very quickly and easily. We even have a free version, you don't have to pay any money for the early version. So do that. It's worth it. 

If someone hasn't been tracking sales tax correctly up until recently and might owe because of it, is there anything they can do to find out or get ahead of it?

The best thing you can do is treat your sales tax similar to the income tax calendar by starting from January 1, 2022. Backdate all of your revenue. So go into Shopify and pull a revenue report and backdate it all the way to the beginning of the year, and then use that report sorted by state. And if you're not sure how to do that ask Shopify, how do I get a state report of all of my sales in said state. Then you can see how much you sold and then focus on the state you are physically located in first, make sure you've set up a sales tax account for that state. And then add that tax information into Shopify and turn tax on. I wouldn't wait. Do it as soon as you can.

It's better to start now. Remember they may not audit you. They may not find out, who knows, but it's better to start now than to wait. Cause all it takes is one state government authority buying candles from you. And then they realize that you don't charge sales tax and you should be. That's the tricky thing about sales tax. It's very clear if you're following or not. The second someone buys from you, they can tell.