Heads up! This article details the tax setup for shops based in the U.S. (or shops with USD set for their currency) For shops outside the U.S., you can find more on your tax setup here.
One of life’s few constants is taxes and we’ve got you covered! 🙌 Based on state sales tax laws, Big Cartel automatically calculates and collects sales tax on all U.S. bound orders– this only applies to online orders, not in-person payments. Then we’ll send the tax collected to the appropriate state (excluding Montana, Oregon, New Hampshire, Delaware and Alaska, which do not have sales tax).
We’ve integrated with TaxJar to automatically calculate and remit sales tax on purchases made in your shop, and to make sure we’re collecting sales tax correctly we need your shop location– this is where your business is based. We use that location, along with your customer’s shipping address, and the product tax code to automatically calculate how much to collect and remit to each state.
Then, as orders come in, you can see how much sales tax was collected and remitted in the order detail, and you can use that info if you need to report sales tax collected to your state.
Depending on your state you may still need to report the sales tax that’s be remitted on your Big Cartel sales. In most cases you won’t have to remit any additional sales tax collected on your sales made through Big Cartel, since that’s already been taken care of. But there are some areas that have home rule laws in place (e.g. - Colorado’s home-rule tax or Illinois’ ROT), and that puts the responsibility of local sales tax on the seller. If you’re unsure what your responsibilities may be, we encourage you to consult an accountant or other tax specialists.
Where you create and ship your products from will determine the amount of tax that’s collected and remitted, but that doesn’t mean you have to have a warehouse, office space, or brick and mortar store. Just let us know where you’re based, and that’s okay if you run your business out of your garage!
By default all products are assigned a retail tax code, and that should work for most products. But maybe you have individual products that have different tax requirements - maybe it’s a service that’s tax exempt for example. No worries! You can assign tax codes on a product by product basis. Keep in mind that changing the tax code for a product may change how much tax is collected for that particular product. Before making changes on the product level, your best bet would be to reach out to a tax pro, and they can guide you so you’re making the right changes for your products.
Heads up! You can find the list of TaxJar tax codes here. If your product type is not on the list then it’s likely there are no exemptions or different tax rates that apply, and you can leave the tax code setting alone. If you’re unsure, your best bet is to reach out for guidance from a tax pro.
We’ll indicate how much tax was collected and remitted on a given order in the Orders section of the admin. So if you need that info for reporting purposes you’ll definitely have it.
Keep in mind that not all orders will have sales tax collected. There are a couple of exceptions you’ll want to keep in mind when reporting your taxes:
Any orders placed in your shop before the tax update on March 9th 2020 won’t have had the sales tax collected/remitted by Big Cartel. Since we didn’t collect or remit sales tax on any orders placed before that date you’re responsible for sales tax on those orders.