Sales Tax 101 Shopify

A Shopify Seller’s Guide to Scheduling Sales Tax Payments

by Mark Faggiano

Sales Tax 101 for Shopify Sellers

Congratulations on opening your new Shopify store! You’re on the road to becoming an independent seller or bringing in extra funds to your bank account every month. Shopify is a great way to get your eCommerce dream off the ground in little time.

Now to figure out the extra annoying parts of your business. That’s right, selling online is not all fun and games, unfortunately. You realized that when you had to collect and remit sales tax, or someone told you about sales tax (were we the first? Sorry about that).

Our Sales Tax 101 for Online Sellers Guide walks you through the basics of sales tax and figuring out which buyers you should collect from. But from there, your journey becomes a little lonely. (That is, unless you join our Sales Tax for eCommerce Sellers Facebook group!) While Shopify enables you to collect sales tax, it’s up to you to do everything else.

We put together this quick post to walk you through scheduling your sales tax payments.

How Often Do I File?

Before you can even collect sales tax, you need to sign up for a sales tax permit with your state’s taxing authority. Most likely this will be through the state, although you could encounter a city or even local community that requires a separates sales tax. That’s the thing about sales tax – it’s a brand new adventure everywhere you go!

So what’s the schedule all about? It simply tells you when your sales tax payments are due. Unfortunately it could be different if you collect sales tax in more than one state. Generally the options you’ll see are monthly, quarterly, bi-annually, and annually, but you might encounter something bizarre – such as two states that consider “quarterly due dates” totally different intervals.

Also, states sometimes change when they want you to pay up, including changing a date they’ve had on the books for quite some years. While TaxJar tries to keep you abreast of all changes like this, it’s important you always pay attention to notices you receive from your state and local taxing authorities. These changes often take place in January and June or July, but – as with most things sales tax related – can vary.

Collect More = Pay More Often

So why did you get your specific schedule? Sometimes you have a choice, which is nice, as you can pay how you see fit and at your speed. More often than not, though, you’ll be assigned a sales tax remittance schedule, and probably not the one you’d have chosen.

This is because most states assign these dates depending on how much money your business is making. For instance if you’re seen as a smaller business taking in a few thousand a year, your state could require only an annual payment. If however you gross six or seven digits in annual sales you could be looking at monthly payments because you’re collecting a bigger amount of sales tax.

Your payment frequency also might change if you suddenly make a ton more money. Maybe you have a particular item take off or get nationwide coverage and customers swarm in. The states where you owe sales tax could change your remittance schedule because of this extra revenue.

Different States, Different Calendars

Yes, “calendars.” The sales tax remittance schedule for your state could be vastly different than a different state you’re selling in and have nexus in.

So let’s say you work out of Georgia and have a quarterly sales tax payment schedule. You start shipping items from a 3rd party warehouse in New York, which means you now have sales tax nexus in that state. New York might give you a monthly sales tax payment schedule, meaning you go from having four payments to 16 payments every year. Simply running a business and selling items just got that much harder!

That’s why TaxJar is here for online sellers. Sign up today for a 30-day free TaxJar trial and take the hassle out of managing sales tax.

Still have sales tax questions? We have your answers. Check out our Sales Tax 101 Guide for Shopify Sellers or start the conversation below in the comments.

  • Daniel

    Dear Mark

    I think for the case of New York, the warehouse does not lead to a sales tax nexus. The New York State has a sales tax exemption allowing qualifying out-of-state businesses to use the services of in-state fulfillment companies (and to store goods at the fulfillment companies’ in-state locations pending distribution) without creating tax presence for the out-of state businesses.

    Here the relevant passages from New York Tax Law §§1101

    § 1101. Definitions.
    (b) When used in this article for the purposes of the taxes imposed by subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the following terms shall mean:
    (8) Vendor.
    (v) Notwithstanding any other provision of law, the term vendor shall not include:
    (A) a person who is not otherwise a vendor who purchases fulfillment services carried on in New York by a person other than an affiliated person; or
    (18) Fulfillment services. Any of the following services performed by an entity on its premises on behalf of a purchaser:
    (i) the acceptance of orders electronically or by mail, telephone, telefax or internet;
    (ii) responses to consumer correspondence and inquiries electronically or by mail, telephone, telefax or internet;
    (iii) billing and collection activities; or
    (iv) the shipment of orders from an inventory of products offered for sale by the purchaser.

    Best regards

    • Thanks for this comment. We’re looking into this!

Start your 30 day free trial of TaxJar. No credit card required.

Cached Query Manual Filing?filterByFormula=OR({State} = "") needs refreshing in 158