Shopify

WEBVTT
Kind: captions
Language: en

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Sales tax in the United States
is baffling.

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There are state and local taxes,
rates for 11,000 jurisdictions,

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rates for different products,
product exemptions for obscure reasons,

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and sometimes different rates
for houses on the same street.

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Tax rates and regulations
change all the time,

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and it's on you to keep up with the
rules that impact your business.

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That takes a lot of time,
or a lot of money

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to have someone do it for you.

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Getting sales tax wrong can
lead to serious financial

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and maybe even legal consequences.

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It's not simple...
unless you have Shopify Tax,

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which puts clear insights

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and the latest tools for accurate 
collection right in your admin.

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Let's start with the basics.

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When do you have to collect sales tax?

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When an e-commerce store in
the United States

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reaches a sales threshold

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or establishes a physical
presence in a state,

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they're required to collect
sales tax from customers.

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There are 45 different state thresholds,

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and if you don't collect
at the right time,

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you could end up paying the tax you were
supposed to collect from customers

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out of your own pocket.

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Without guidance 
on when to turn on tax collection,

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you'd have to carefully read the rules

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for every state you sell in,
or pay for regular assessments.

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Shopify Tax provides that guidance,

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with a state-by-state view
of where you're currently liable,

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and where you might soon be.

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Once you start collecting,

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How can you be sure you're
charging the right rates?

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If you're under-collecting,

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you'll end up short at tax time,

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and the difference
comes out of your pocket.

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If you over-collect, you may have to pay
back your customers,

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declared to tax authorities,
risk fines... or worse.

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There are a few factors at play in
determining the right tax rates.

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Let's start with the products you sell.

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Products are taxed based on different
rules for every category,

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and these are determined by the state
and local governments

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that impose the tax.

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To do this manually,

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you'd have to parse through stacks
of product-specific tax regulations

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to decipher which rules
apply to your products,

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for each state you sell in.

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Shopify Tax takes the pain out of
determining the right rate

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for your products.

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When you add
a product to your store,

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Shopify suggests a category that
you can approve or modify.

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Once those are assigned,

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Shopify decodes the relevant tax rules
for every sale,

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including exemptions
that could save your customers money.

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But accuracy is about more than
just the right product rates,

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because local taxes for your customers

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are determined
by thousands of regulations

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that can even differ
from house to house.

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Calculating based on zip codes
doesn't cut it anymore.

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That's why Shopify Tax 
uses rooftop-level accuracy

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to determine tax rates

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based on the exact geographical
location of each delivery.

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When your customer makes a purchase,

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Shopify Tax verifies the state
and local tax rates,

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and product-specific rules for
their delivery address,

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giving you the most accurate
calculations.

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Keep in mind these state thresholds,

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product rates, and local taxes can

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and do change hundreds of times
every year.

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Anyone manually managing their sales tax
would have to monitor

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for updates year-round, because with any
change they could suddenly be liable

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or collecting inaccurately.

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That's why Shopify Tax routinely
scans for tax rate updates

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and automatically applies them for you.

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As your business grows,
sales tax is inevitable.

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That's why Shopify Tax was created,

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so you can feel confident in
your sales tax compliance,

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keep your earnings,

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and have more time to do the things

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that matter - in business, and in life.

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Go to shopify.com/tax to learn more.