Charging US Sales Tax on Shopify

Online sellers are obligated to collect sales tax in states where they have a Nexus - a physical presence or significant sales. A sales tax license must be obtained in each relevant state to be able to collect sales tax.

Below are the need-to-know basics.

Having a Nexus

Online sellers are obligated to collect sales tax in states where they have a "Nexus". Having a Nexus means that a seller has a presence in that state. It could be a physical Nexus (a home or an office, a warehouse, employees, etc) or an Economic Nexus (significant sales).

How the Laws Change by State

The laws change by state, but in most states, if your yearly sales in that state are higher than 100,000$ or 200 transactions you have an Economic Nexus even if you don't have any physical presence. Some states don't use Economic Nexus at all and don't require online sellers to pay sales tax unless they have a physical presence in that state. If you have a nexus in a certain state you must get a sales tax license and collect sales tax from clients in that state. Shopify can automatically take care of the sales tax calculations, you just have to take the time to properly set it up.

A Word of Caution

This is just a general overview and shouldn't be considered as legal advice. You should consult with a local tax professional to make sure that you comply with sales tax regulations.