Shopify sales tax reporting: how to pull the report your accountant needs

Do I charge sales tax on Shopify?

You charge sales tax on Shopify wherever you have tax nexus, meaning a connection to a place that obliges you to collect its tax. That includes your home state and any state where your sales cross an economic threshold. In most US states that threshold is around $100,000 in sales or 200 transactions a year, after the 2018 South Dakota v. Wayfair ruling.

Shopify does not decide this for you; you configure which regions you collect in under your tax settings, ideally with an accountant's guidance on where you have nexus. Once configured, Shopify applies the correct rate at checkout. Getting the where right is the part that needs judgement, because collecting in a state you have no nexus in, or failing to collect in one you do, both create problems.

Does Shopify report sales tax to the states for me?

No. Shopify calculates and collects sales tax at checkout, but it does not file returns or remit the money to any state or tax authority. That collected tax is money you are holding on the government's behalf, and filing it on time is your responsibility. Treating Shopify's collection as if it were filing is one of the most common and costly assumptions sellers make.

So the tax Shopify shows as collected is a liability, not revenue. It is not your money; it is money owed onward. Keeping it separate in your mind, and ideally in your bookkeeping, stops it being spent as income and missing when the filing deadline arrives.

How to get a sales tax report from Shopify

Shopify provides a tax report under its finance reports that breaks down the tax you collected by region over a date range. You open the reports area, choose the tax or finances summary report, set the period to match your filing cycle, and export it. That export is what you or your accountant use to complete each return, one jurisdiction at a time.

The catch is that Shopify's report shows what was collected inside Shopify. If you sell anywhere else, or you want the collected tax sitting alongside the rest of your finances in the shape of your actual return, you need a report that is organised the way you file rather than the way Shopify happens to group it.

How much tax do you pay on Shopify?

There are two different taxes people mix up. Sales tax, VAT or GST is charged to the customer and passed on to the authorities, so it is not a cost to you. Income tax is charged on your business profit and is a real cost. Shopify helps collect the first; the second depends on your profit and your country's rules, and is a matter for your accountant.

This distinction is why Margio treats collected sales tax, VAT and GST as a liability memo and never as revenue. Counting tax you collected as income would inflate your revenue and your apparent profit by money that was never yours to keep.

How Margio helps with collected tax

Margio organises the tax you actually collected through Shopify into the shape of your country's return: US sales tax by state, UK VAT, and Canadian GST, HST, PST and QST. It reports what was collected so you or your accountant can file, and it exports cleanly for that purpose. It never asserts what you owe and gives no filing advice.

The design choice here is deliberate. Margio's role is to organise collected tax and a monthly profit and loss for the person who files, not to replace them. It hands your accountant a clean, correctly grouped record of what was collected, which is exactly the input a return needs, and stops short of the judgement calls that are theirs to make.

This article and Margio's tax reports are general information and record keeping, not tax advice. Rules on nexus, rates and filing vary by country and change over time. Confirm your obligations with a qualified accountant.