Automate Sales Tax & VAT Compliance for Shopify
Indirect tax calculation, reporting and filing for Shopify sellers.
What is Shopify Tax?
Shopify Tax is part of Shopify’s settings and allows you to “turn on” sales tax in relevant states. If you are registered in a state, you activate the state and Shopify will automatically add sales tax to your sales price at checkout.
However, there are two problems with Shopify Tax. Luckily, Yonda can help resolve these problems:
Sales Tax on Shopify
Shopify likes to ensure their merchants are compliant with tax laws, so they analyse your sales to see if you should be collecting sales tax anywhere. If you’ve received the Shopify nexus alert, there are 3 things you should do:
Find out where you need to collect tax
Shopify’s analysis isn’t always accurate – the nexus rules are complicated, so feel free to contact us for a free assessment.
Register in states where you have nexus.
If you have nexus, you need to apply for a sales tax permit or register for a sales tax ID with those states. We can help you get set up in all states, including if you should have been collecting tax for a while already and need to register “retroactively.”
File your returns
Once you’re registered, you’ll have to file returns and pay over the tax you collect. This might include “back-dated” filings for previous periods you missed. The returns are complicated, but we can file these automatically on your behalf.
Yonda Manages Your Shopify Tax
Running an online business on Shopify is tough without global tax worries. Yonda simplifies Sales Tax, VAT, and GST, keeping you compliant worldwide.
Yonda's core tax services:
Shopify API Integration
Connect your Shopify store to our platform with one click. We’ll automatically import transactions for filings and nexus analysis—once connected, you’re good to go.
We help you set-up
Our expert team will assist you with the setup—at no extra cost.
Sales Tax Registration
Based on your tax obligations, our expert team will help register your business in all states, regions, or territories where you need a tax permit.
Automated Tax Return Filing
Send Yonda your sales data each month so we can review and file your tax returns on time. You can upload it manually or set up automatic uploads with API integration.
Complimentary Nexus Analysis
Send us your Shopify Orders report (US sales only), and we'll analyze where you may have triggered or are nearing economic nexus. Nexus rules vary by state, but Yonda simplifies the process.
A Dedicated Tax Manager
With Yonda's dedicated Account Manager, you don’t have to handle tax alone. Your account manager understands your business, provides tailored advice, and is ready to answer your questions. Contact us to learn how Yonda simplifies sales tax for your Shopify store.
How to Make Your Shopify Store Tax Compliant
How Tax Impacts Your Business
Tax (VAT & GST)
Shopify Tax provides no support or advice, only showing your current liabilities. Complying with VAT or GST requirements can significantly impact your business, so it’s vital to understand both legal obligations and commercial implications. While software can automate the process, you must consider factors like legal risks, efficient tax structuring, and managing product categories.
US Sales Tax
Shopify Tax lacks guidance, only highlighting sales tax liabilities and thresholds. Registering and charging tax in the US has major business implications. You need to understand your obligations, including legal risks, audit preparedness, product category management, and tax handling across multiple sales channels.
- Shopify Tax offers no support, advice or practical guidance. It does show your “current US sales tax liabilities” and where you might be “approaching thresholds” – but what does that even mean?
Register for a Sales Tax Permit
Tax (VAT & GST)
If customers in multiple countries buy from your Shopify store, you may need to register for VAT or GST. This requires understanding where your business has tax obligations and applying for permits in those regions, often involving detailed forms and business documentation.
US Sales Tax
Selling to customers across multiple US states may require sales tax permits. You must assess your Nexus obligations to know where to register. Each state has its own registration process, typically requiring a form and supporting documents on your business, supply chain, and products.
- Shopify Tax doesn’t help you with registrations.
Set Up Tax Collection At the Point of Sale
Tax (VAT & GST)
Shopify Tax is not free, and costs vary based on your products and customer locations. It's crucial to understand how VAT or GST compliance affects your business. Shopify allows merchants to activate tax collection in admin settings, adding the correct tax at checkout.
US Sales Tax
Shopify Tax charges based on your sales and customer locations. Once registered in a state, you must charge sales tax on eligible sales. Shopify simplifies this by enabling merchants to activate tax collection in settings, ensuring the correct tax is applied at checkout.
Calculate, Report & File Tax Collected
Tax (VAT & GST)
Shopify Tax does not handle tax return filing or payments for VAT and GST. You must submit monthly or quarterly returns in each country where you're registered, accurately reporting sales, discounts, and refunds to avoid penalties.
US Sales Tax
Shopify Tax does not file returns, process payments, or account for sales tax holidays. You must electronically file detailed monthly or quarterly returns with each state, reporting sales by jurisdiction and product. Accurate reporting of discounts, refunds, and tax holidays is essential to avoid penalties.
- Shopify Tax does not file the returns for you or help you pay the taxes; it also doesn’t take into account your sales made via other channels like Amazon, Walmart or Etsy.
Why It’s So Important to Register for Sales Tax, VAT & GST
Failing to register and pay Sales Tax or VAT can lead to serious legal and financial trouble. States can demand back taxes with heavy penalties—and the chances of getting caught are very high! In addition to the financial penalties non-compliance also brings other risks, including:
You may fail due diligence when selling or listing your business.
Your Shopify store could be shut down by authorities.
Your reputation could suffer permanent damage.
Your product may be banned in multiple jurisdictions.
Why Is Shopify Sales Tax So Complex?
Sales tax in the USA is a state-level consumption tax on goods. There is no federal law governing it, and 46 states. The first state to implement a sales tax was West Virginia in 1921 and since then, it has been adopted by 46 states (and is used in Washington DC). Shopify merchants must charge sales tax if they have "nexus," meaning a legal obligation to register and collect tax in a state. Nexus rules vary by state, making it difficult to know where to register. Generally, there are two main ways to establish nexus:
FAQs
Why has Shopify updated Shopify Tax to include US sales tax?
Does Shopify automatically register me for sales tax?
Does Shopify collect and remit sales tax?
Does Shopify file my sales tax returns?
Can I integrate Shopify with a sales tax app?
What makes Yonda different from other tax service providers?
Does This Apply to US Sellers Only?
Speak to an eCommerce tax expert today
Schedule a call today
