how to do tax free weekend on shopify

Setup your Shopify Taxes Correctly (only 5 min!) taxes can seem scary I get it but it,doesn't have t

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Updated on Jan 10,2023

Setup your Shopify Taxes Correctly (only 5 min!)

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Setup your Shopify Taxes Correctly (only 5 min!)

taxes can seem scary I get it but it,doesn't have to be so let's break it,down real quick when you're selling,online you need to collect sales tax for,any item that you've sold however each,state does it a little bit differently,which just makes it super confusing so,some states you only have to collect,sales tax if you have a physical,location there like if your business,headquarters is there or if your,Warehouse is there that you're shipping,the products out of other states it's,based off of a revenue threshold of how,many sales you're making for products in,that state which is called an economic,Nexus and each state also has different,levels of the threshold here just to,make it even more confusing some states,you don't have to collect sales tax on,different types of products like in New,Jersey you don't have to collect sales,tax on clothing or Footwear in,California you don't have to collect,sales tax on food that is consumable it,can get really confusing but thank,hopefully there is a better way to,manage it all and make sure that you,don't end up with a huge unexpected tax,bill you used to have to manage all this,individually with a third-party Shopify,app or just your own bookkeeping team,but thankfully there is a new feature,called Shopify tax that makes it all a,lot easier and all just in your Shopify,backend area,so you want to make sure that you've,actually opted in for this new feature,of Shopify tax because it is free for,your first hundred thousand dollars in,online sales and then after that is just,a small fee to management moving forward,so you can get to this area by going to,your settings and your Shopify back-end,and then taxes and duties and you can,then set up there which individual,states you need to be collecting sales,tax for and it'll start showcasing based,off of your thresholds of how many sales,you have in each state as well so it'll,notify you when you need to start,collecting sales tax in a new state and,start showcasing what tax that is make,sure it's charging it to the customers,as well as showing you what that is on,the back end so you can make sure that,you are saving accordingly a key feature,in getting this to work correctly is,making sure that your products are,categorized correctly within Shopify and,you can find this area in the taxes and,Duty section as well but this way it,helps Shopify know based off of,different states that charge taxes for,different types of category of products,it'll let Shopify know what type of,category your product is in and make,sure it is charging the appropriate,sales tax or not charging sales tax,based off that so you want to make sure,that you go in and make sure all of your,products are categorized correctly so,just to make this even more confusing,this is just sales tax that I'm talking,about right now this is not income tax,which each state charges individually or,each country charges individually as,well and you'll have a federal income,tax so this is where it gets even more,confusing and honestly I'm not an,accountant I'm just a web designer so I,highly recommend that you reach out to,an accountant and get all this set up,because you do need to be paying an,income tax for the state or federal,level that you are in to make sure that,you're paying taxes off the money that,you've made from your business again not,an accountant so make sure you hire,someone that can help you with all of,this and and set everything up correctly,from the very beginning a book that I,have found really helpful and just,setting up your business correctly is,profit first it really helps me,understand kind of just how I need to,set up different systems in my business,as well as how much money I need to save,for operating expenses taxes all those,things and of course paying myself as,well so I highly recommend this book if,you're interested in more kind of,business fundamentals behind the scenes,information and I'll put a link to it in,the description below as well,I'll be honest I actually made a huge,mistake and did not set aside enough,taxes in the first year of my business,and it was a pretty uh bill so do not,make the same mistake and if you want to,see more lessons that I've learned along,my entrepreneurship Journey over the,last 12 years then check out this video,over here I've got more tips and things,that I recommend you doing and not doing,as well to help you along the way

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