Ever wondered how to file sales tax from one of the world’s largest eCommerce development platforms – Shopify? Being one of the top website development companies, Shopify provides services to help store owners to file sales tax in Colorado. It helps to automate charging sales tax.
Since Colorado is separated into districts, each district has different tax rates. Shopify provides all the facilities to set up taxes on your products that automate the calculation of taxes on each district. Sales tax is calculated according to state, county, municipality, and physical and economic nexus. This article will help you handle the complexities that arise while charging sales tax from your customers in Colorado.
Steps to file Colorado sales tax from Shopify
Register With Colorado Tax Agencies
To charge sales tax, first, you’ll have to register with Colorado Tax agencies. Register your business with them and get a sales tax ID. You can do so by visiting the state’s website.
Sales Tax Setup
Having registered with the tax agencies and getting your sales tax ID, move ahead to set up your store to charge sales tax.
- From Shopify admin, go to Settings>Taxes and duties.
- Choose the United States.
- The location of your business will be displayed there, i.e. Colorado.
- Enter Sales Tax ID for the Colorado state. If you have not received it yet, leave it blank, and update it later.
Set up Tax Calculations Criteria
After selecting your state – Colorado, move on to Tax Calculation.
You will see the following options to choose from, you can select more than one option:-
- All prices include tax.
- Include or exclude tax based on your customer’s country.
- Charge tax on Shipping Rates.
- Charge VAT on digital goods.
Since Colorado charges tax on shipping rates, you’ll have to choose Charge tax on shipping rates. Choose other options based on your requirements.
Set up Automatic Tax Calculation
The taxes in the United States vary according to county, city, and state. In Colorado, the taxes are charged according to the district. Shopify allows you to set up automatic tax calculations to handle this complexity. Shopify applies general tax rates that are updated regularly. Here’s how to do it:-
- From your Shopify admin, go to Settings> Taxes and duties
- Click set up, for the United States region.
- From the calculating tax section, select calculate taxes automatically.
- Add physical presence for the regions where you have nexus, then select Colorado, besides the state, add the zip code of the location where you have a nexus, and at the last click add a state.
The applicable taxes will be displayed for each physical presence that you enter.
Colorado Special Tax Rules
- Since Colorado is separated into districts, you will have to charge state tax as well as district tax in your customer’s location.
- Certain localities have special registration and filing requirements.
- Some localities may use the Sales and Use Tax System (SUTS) to allow simplified local registration and filing.
- Shipping is not taxable if the actual cost of shipping is listed on a separate line on the invoice.
How is Nexus Determined?
Nexus is determined by the amount of revenue from sales to customers in Colorado and using sales from the previous and current calendar years. You have a nexus if you have met the following condition:
- Your revenue from sales to customers was $100,000 or greater in the previous or current calendar year.
If you’re in doubt about whether you’ll have to remit taxes in Colorado, contact US State authorities or Local Tax professionals.
Apart from website development services, Shopify does offer a flexible system to charge and file sales tax. It helps by automating sales tax collection from the buyers. It displays the tax calculated from each buyer on each product. The most important thing is that Shopify does not file sales tax for you, the sales tax is remitted by you to the state authorities. You don’t own sales tax as collected by the shoppers, it is the state property and should be transferred to the state.
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