Shopify Tax Setup Trips Up New Sellers Every Time
Small online retailers are experiencing significant challenges navigating Shopify's intricacies, including tax setup, gift card migration, inconsistent shipping rates, and high shipping costs. Many are migrating from other platforms like WooCommerce, highlighting a desire for simpler solutions but encountering unexpected hurdles within Shopify's ecosystem. This complexity impacts their ability to efficiently manage their businesses and serve customers.
SOURCES (60)
“I feel your pain. We’ve been struggling with the same thing with the Shopify POS for quite a while. We use the same approach as other commenters in this thread recommended. It’s just clunky and manual. What we need Shopify to do is enable the…”
“I wouldn't use inventory locations as a workaround for the sales-tax issue without checking exactly how your POS and fulfillment settings interact. Your booth is really a selling location, while the warehouse is the inventory/fulfillment location, and those don't necessarily need to be treated as the same thing. The bigger thing I'd want to avoid is creating a second pool of inventory every time you attend a market, especially with only a few units per SKU. I'd look at whether yo”
“Hi everyone. I sell my products online and at makers markets in my home state. Each city has its own tax rate so I figure I need to set up a location when I go out to a market so the tax rate is correct… but when I do, it gives me a notice that says “not stocked.” From what I’ve found in my searches, is t will mess up my inventory counts. Is there a way to sell from remote locations and fulfill those orders from my “warehouse” without transferring inventory back and forth? I carry maybe 5 of eac”
“depends. a lot of time I add a case quantity variant for a lesser price. like: Each $5 Case of 20: $80 Just a bit easier that way. yet most of my commercial b2b orders that have a custom price we will create the invoice and send it to the customer out of shopify.”
“The biggest advantage of Managed Markets is exactly what you mentioned—having duties and taxes calculated and collected directly at checkout (DDP). This massively improves the customer experience because they won't get hit with surprise customs fees at the door, which is a major cause of package refusals and negative reviews, especially for EU buyers dealing with strict VAT rules. While FedEx and DHL might seem less standard than USPS or Canada Post, international customers actually tend to”
“On the Shopify side specifically, since that part is easy to get wrong. Use Shopify Markets and create Malaysia as its own market. Set MYR as the presentment currency with price rounding, otherwise you get MYR 43.87 style prices that read as an import and kill conversion. Turn on duties and import taxes at checkout so the customer pays landed cost up front. Cross-border stores that leave the buyer to get a surprise bill from the courier see the returns and the chargebacks, not the sale. Read up”
“the accounting side you'll get better answers than mine on, value vs weight vs volume is a policy call and people here can argue it properly. but on the spreadsheet half: whichever basis you pick the mechanic is the same, line_basis / total_basis * total_freight. the thing that bites people is rounding. round each line to cents and the allocated total comes out to 1000.01 instead of 1000.00, so your inventory doesn't tie to the freight invoice. you have to push the residual onto one line”
“Stripe Tax team employee here and wanted to chime in from our p.o.v. You're right that sales volume alone isn't the only reason for needing a live tax engine. The real factors are things like how many jurisdictions you're registered in, whether those jurisdictions have specific rules for digital products, and whether your current setup can handle the tax treatment accurately. For digital goods sold globally, it can be challenging because different countries treat digital products dif”
“We just switched purely because of the two or three dollar EU fees. I’m in the US and the rates being offered through them for FedEx and DHL were very comparable to what we were getting using USPS/global post.”
“When using Shopify Payments, the currency conversion rate is based on the live mid-market exchange rate, plus a currency conversion fee (usually around 1.5% to 2% depending on your specific Shopify plan and region). You can view the exact exchange rate used for your transactions directly in your Shopify Admin. Go to Settings > Payments, and in the Shopify Payments section, click "View payouts." If you click into a specific transaction within a payout, it will show you the exact brea”
“You are going to have many situations where people want items shipped to a different addresses. Particularly for higher priced items. I may not want an expensive package sitting outside my house all day while I'm at work, but I'm able to have packages shipped to my work where there is always a receptionist so nearly always do this. I the UK typically banks and or PayPal validate that the card holder and billing address match, shipping address doesn't come into the question. If concer”
“Just a small question. My markets are in Europe and some people are using wero and I think more and more people are going to use it. It has very low transaction fees. Shopify is sometimes hiding and showing payment methods depending on the chance somebody will use it. I can also turn this of which means all the options will always be there. If the option is there the more chance it will be used. And then i will have lower transaction fees. Anybody got some advice? submitted by /u/thi”
“Hello. I'm a seller based in EU but there is no DDP courier service in Post office at my place while UPS DHL etc cost more than 150 euro insane price. And Etsy and my clients don't accept non-DDP Servis. Could you please tell me how you solve the problem ? Thank you 💖 submitted by /u/CalligrapherSome1566 [link] [comments]”
“I just tried this. I created a Shopify Flow that tags the customer based on their order, created a customer segment based on that tag, and then created an automatic discount using the customer segment. I might be missing something specific, though.”
“Yes, it's doable without making the customer type anything. Shopify's proper B2B catalogs are Plus-only, but for a normal store the pattern is customer tags plus a discount function. Tag customers bronze/silver/gold, automate the tagging with a Shopify Flow rule that fires on order created and checks lifetime spend, then use a discount function that reads the tag and applies that tier's percentage automatically in the cart. No codes, nothing for them to forget. There are apps that wr”
“You could do it with customer tags. A regular shoify discount that says - if customer is tagged xxxx, they get 5% off. If tagged yyyy, 7% off. The trick is assigning them tags. You could maybe use Shopify flow, to add those customer tags based on their orders/order values. However, you're going to run into a lot of what-about situations... Which can get complicated fast, and is why most people just use a loyalty app.”
“Hey everyone, I’m trying to get my bookkeeping workflow sorted out for sales on both Amazon and Shopify, but I’m running into a bit of a headache with how to properly account for withheld taxes and marketplace facilitator deductions. Between Amazon automatically collecting and remitting sales tax in most states—along with withholding other fees and reserves from payouts—and Shopify handling taxes depending on state settings, the net payout hitting my bank account never matches gross sales. I wan”
“Hey! I am happy to help with this if I can. The short answer is no, you do not need a sales tax license in every state simply because you ship an order there. I think that's step one to this - making sure you understand your obligations as a business. The question you need to answer is not, "Where do I ship?" It is, "Where does my business have nexus?" Nexus is essentially a large enough business presence in a state to constitute needing to collect and remit sales tax whe”
“All 3 cost the same when i compared their cubic rates: shopify/veeqo/pirateship. But, shopify has the added benefit of free insurance on each label purchased through them on orders up to $200. Veeqo and pirateship require separate paid insurance.”
Pirate Ship rates have exactly matched Shopify every time I've checked.
“Try UPS Ground Saver, it’s about $5.40 average for my smaller lighter stuff. And under $10 for large 10+lb boxes.”
“I was away for a month and the first two orders I’ve shipped upon my return cost me around $8 when I was paying below $6 just in July. What happened?? I checked Etsy shipments and a shipping a similar package still costs $5.67. I chatted with customer service and he basically said Shopify might negotiated a different rate and did not help. But seriously, USPS rates used to be much lower than UPS or FedEx whereas today the difference was just $2. I have to offer free shipping over $40 and my ship”
“I use shopify. I have ReturnGO for all domestic orders, but am looking to change. Not that there's anything wrong but the cost I find high. For exchanges, if you want it to automatically 'create' the new order, so you don't have to log in and click the approve button, it's something like $160/mo as an add-on. I also don't have many returns, and i find the others are also very expensive. I have been getting emails about Navidium returns, but I need to look into them. Their”
“Shopify could have more tools worked in that could help you at this stage. Since you're shipping products, it comes with shipping rates and stock tracking built in to the core setup. And it runs a bit more than Squarespace's cheapest tier, but could save you the hassle of needing extra tools layered on.”
“Do you have your own storefront or use shopify? Also are you using any return platform like Loop, etc. ?”
“Once we got into multiple states biggest headache was not the rate calculation. It was keeping track of registrations, return dates, zero returns and different state portals”
“same. I setup the right VAT + the frigging 3 euro charge, my customer want it, they pay the extra fees, i will ship.”
“We run a $3m Shopify / Amazon FBA business selling travel gear. We typically receive supplier invoices via email as PDFs or Excel files. We take a quick glance at them and then pay it. We never thought to double-check the invoices or calculate the totals by hand. We had been running our business mostly through spreadsheets, but it was getting overwhelming, so we moved to an AI supply chain management called Supply Automate system to streamline our operations. Basically, you upload your PO or shi”
Close, Colorado. We have 70 different municipalities that self collect.
“And not all of them collect through the state. With many jurisdictions, you have to have your own accounts and pay directly.”
“Hopefully you aren’t in California. I have to individually allocate taxes to all the different cities that customers paid from. It’s a huge pia to file my sales tax returns.”
“So if I don't sell more than the states threshold, I just pay sales tax to my home state where I ship from?”
“You need to file in every state that you have a physical location or economic nexus. Each state has their own threshold. Most are at above $100,000 gross sales to that state and/or 200 individual transactions. https://www.salestaxinstitute.com/resources/economic-nexus-state-guide”
“Hello Everyone, I have an established Etsy, but am looking to expand into TikTok and move away from Etsy a little bit. ChatGPT was able to migrate almost all of my listings to Shopify without any issue, but as I was setting things up, I noticed that Shopify does not pay/file sales tax like Etsy does. I have a local sales tax license, but it looks like I need one for every state I ship to and then would need a special one for every locality that self collects. Is this the case? Is there an easier”
“We also started monitoring nexus instead then registered when the thresholds actually mattered”
“Free shipping on orders 35+ is killing my profits. People will throw in a small item just to make it over 35 and boom I’m stuck paying for shipping & giving the items away at that point. Should I adjust my item pricing or remove the free shipping? I would rather remove the free shipping to avoid raising the prices on most of my listings but I’m afraid Etsy might give me less traffic. I heard the free shipping over 35 option helped with traffic and conversions but am unsure if true and super”
“There is no native merge, so everything is a workaround. In general I would do it in that way (to not mess up sales & tax data) Create an extra order (in test mode with test payment gateway) Add both line items from both orders Mark it as paid & add the customer You can ship this order. Then depending on your fulfillment flow you need to do something with the original two orders: fulfill, cancel or archive. I would simply archive & fulfill them. Test it out with one example first to”
“One surprisingly boring one for me was making the shipping cost and delivery estimate impossible to miss before checkout. People will tolerate a lot if they know exactly what they're paying and when the order should arrive, but finding an unexpected shipping charge at the end is a quick way to lose someone. I also like putting the strongest reviews/objections near the actual buying decision rather than dumping all the reviews halfway down the page. Another small one is replacing vague CTA co”
“We looked at avalara when we were comparing options, but it felt heavier than what our team actually needed. I cared more about how much work would still be left on us after paying for the platform”
“Hi everyone! I'm a Canadian business using Shopify and Chit Chats, and Canada post to ship orders internationally, including to France and other EU countries. I'm looking for a way to prepay the VAT/customs charges so my customers don't have to pay anything upon delivery. Chit Chats and Canada post allows me to enter an IOSS number when creating the shipment, but I don't ship enough orders to the EU to justify paying for an IOSS intermediary with a monthly subscription. Does anyo”
“yeah this is a tricky spot. most IOSS providers want you signing up for monthly plans because they assume steady volume, but for occasional shipments it feels like throwing money away i was in similar situation last year and ended up using a freight forwarder that let me pay per shipment. it was little more per parcel but no monthly fee, just a small admin charge on top of the VAT. can't remember the name but i found them through a shipping forum, maybe worth searching "IOSS pay per shi”
“Hi everyone! I'm a Canadian business using Shopify and Chit Chats, and Canada post to ship orders internationally, including to France and other EU countries. I'm looking for a way to prepay the VAT/customs charges so my customers don't have to pay anything upon delivery. Chit Chats and Canada post allows me to enter an IOSS number when creating the shipment, but I don't ship enough orders to the EU to justify paying for an IOSS intermediary with a monthly subscription. Does anyo”
“Hey, one clarification here - the split isn't really coming from your profiles. Shopify lists "preorders and one-time purchase products" as its own reason to create separate delivery groups, so you'd end up with two shipments even with a single profile. And since Shopify builds those groups from the order data, there's no way to provide the customer with a "combine these" options at checkout. What the merchants I work with do (I build K1 PreOrder & Deposit app”
“We just use calculated shipping plus a handling charge. You just need to have your product info correct. We do offer free ground shipping above price threshold but save that as an upsell for members only, and use 2day delivery upsell as coupons periodically”
“Is there any way to correctly setup a listing for global fulfillment! For prints for example I can get them printed in the UK or USA but it still looks like they ship internationally from my home country submitted by /u/Fantastic-Roll5074 [link] [comments]”
“Shopify keeps showing me those tax liability warnings, 6 states now. For those who dealt with this: did you register everywhere it flags, hire someone to figure out where you're actually on the hook, or just handle the big states and move on? If you paid someone, what was the service actually called and what did it cost? I rather not hire an accountant unless I absolutely have to submitted by /u/EEnoobseekinghelp [link] [comments]”
“Shopify keeps showing me those tax liability warnings, 6 states now. For those who dealt with this: did you register everywhere it flags, hire someone to figure out where you're actually on the hook, or just handle the big states and move on? If you paid someone, what was the service actually called and what did it cost? Trying to learn what people my size actually do before I pay anyone. submitted by /u/EEnoobseekinghelp [link] [comments]”
“Shopify can help calculate and collect but it doesnt mean the whole compliance responsibility disappears like it often feels on ebay or amazon. We kept things simple while we only had one state”
“I started an online small business back in May and I have had a few people asking for EU and UK shipping (I’m in the US). Obviously the EU shipping is too much to navigate right now, but I’m having issues figuring out what regulations are needed for shipping to the UK? I’ve looked on some of their government websites and cannot make sense of what I’m reading. Do they require the same things, like an authorized representative, paying for packaging recycling, registering for VAT, etc? Any advice o”
“I’ve been digging into cross-border checkout lately and there’s one scenario I’m curious how actual store operators diagnose. Say traffic quality looks roughly normal across markets. People are viewing products, adding to cart and starting checkout at a reasonable rate, but completed purchases are noticeably worse in a few countries. At that point there are so many possible causes that it feels easy to optimize the wrong thing, like unexpected shipping/tax costs, currency or pricing friction, mi”
“We ran into the same problem once inventory started sitting in more states. Marketplace tax was mostly handled, but our direct-store exposure got harder to track because physical nexus was changing in the background. We moved the nexus monitoring and state filing side into taxwire”
“Hi guys, Very new to this. Background in marketing so I'm slowly picking it up..however I've just found out my printer charges by weight. How do you deal with this in the back end? It's set at $11 standard shipping and $15 express..however if someone buys numerous, the printer could charge me $20+. But I don't want to automatically charge someone $20 if they buy a single item. How do I caveat that in the back end that shipping cost is by weight? Seems clunky.. submitted by”
“This is common! The marketplace facilitator laws only cover what Amazon collects on their own platform. Your Shopify orders are entirely on you, separate system, separate tracking, separate filing. The spreadsheet mismatch usually comes from trying to track both in one place. What works better is treating them as two different tax obligations from the start. Marketplace tax gets reported but you’re not remitting it since Amazon already did that part. Your direct site tax is the one you actually”
This may not be legally compliant depending on your country/local laws.
“Hi there, long story short: I'm helping a client who has set up an ecommerce store, and they are using printful. They're making some good sales right off the bat, so that's great. The issue is that printful is charging my client a tax on every order, in every state. Now, my client has not uploaded their reseller certificate yet, which I am telling them to do. However, their reseller certificate is for New York, which is the only state where they have a nexus. My understanding is when”