Last Updated on April 22, 2023 by Ewen Finser
With all of the day-to-day tasks you have to worry about owning an online store, chances are taxes are not one of your favorites. However, if you don’t take the time to properly set up retail taxes, you can cause yourself a lot of unnecessary time and frustration.
While Shopify themes provide a built-in tax engine that automates some of the tax calculations, you will still need a third-party tax app to complete the job. Especially if you are trying to cut costs and deal with taxes on your own, calculating taxes accurately can make or break your business.
Tax apps that integrate with Shopify can help you generate invoices, monitor inventory, tax calculations, international taxes, complete returns, and provide help with tax exemption. Depending on how complex your eCommerce business is and how much aid you need with taxes, there are Shopify app integrations that can alleviate the stress of tax compliance so you can focus on scaling your business.
There are a large variety of tax apps available, but not all of them are worth your time. I have selected the 10 best Shopify tax apps according to the following criteria: diverse features, customization capabilities, and affordable pricing.
My favorite Shopify tax app for small businesses is TaxJar. It has a 30-day free trial so that you can see if the software is right for you without investing your hard-earned money upfront.
Plus, premium solutions to help you scale. Larger businesses will benefit from a tax app that can integrate with existing software (for free!) and provide the most features for the price. My favorite choice is Shopify Connector by Intuit.
- Free trial: 30 days
- Price: Starter Plan (reporting and filing), Professional Plan (sales tax automation), Premium (customized sales tax solutions), contact TaxJar for pricing
- Shopify app store link: TaxJar
With one click you can link TaxJar to your Shopify store. Once you are linked, you can since all of your transactions daily. Sales tax by city and county is linked too. TaxJar automatically keeps track of sales tax so you don’t have to. The software will even alert you when returns are due. Turn on AutoFile and your tax forms are automatically submitted so you never miss a deadline.
The nexus checker can help you see the states in which your sales have exceeded the economic threshold. Utilizing this feature can help you receive automatic notifications when you approach or reach thresholds in each individual state.
TaxJar provides a flexible API, AI-driven product categorization, and real-time calculations, all in a cloud-based platform. The award-winning support team will get you onboarded quickly and is there to help when an issue arises. An extensive knowledge base can help you answer common questions while a direct email address provides professional support for individualized concerns.
- Free trial: 7 days
- Price: Hobby Plan $29 per month (up to 25 transactions per month), Startup Plan $49 per month (up to 250 transactions), Business Plan $99 per month (up to 1,000 transactions), Growth Plan $149 (up to 2,500 transactions per month)
- Shopify app store link: Quaderno
Quaderno is currently available in the Shopify app store and efficiently stores all of your Shopify invoices and receipts (both paid and unpaid). Plus, if you sell on other platforms like Amazon or PayPal, you can monitor all of the revenue transactions from one dashboard.
You can customize your invoices and receipts in any language to provide your customers with a professional, branded, and personalized experience. Perfect for doing business internationally.
Quaderno keeps you tax compliant before and after the sale. The software keeps track of tax-exempt products, reverse-charging, and even tax-free areas. When it’s time to file, use Quaderno to calculate US sales tax, VAT, and GST to dramatically reduce the time you need to complete your business taxes.
3. Invoice Falcon
- Free trial: 7 days
- Price: Free Plan (up to 50 invoices per month, $9.99 per month beyond 50), Business Plan, $15 per month, includes unlimited invoices, multilanguage, multicurrency, etc.
- Shopify app store link: Invoice Falcon
Invoice Falcon offers customization of business documents including invoices, credit notes, proforma invoices, quotes, and packing slips. Documents are tax compliant worldwide including in the United States, Canada, UK, Germany, and more.
Your company-branded invoices can be printed, downloaded, and automatically emailed one-by-one or in bulk. As a bonus, no coding experience is required to personalize invoices with custom colors, logos, etc. Automatic payment reminders can be sent for invoices with flexible payment dates. Plus, print packing slips for partial shipments to keep customers informed about their orders.
The Business Plan offers unlimited invoices, multi-currency support, and international tax calculations for VAT, GST, GSTIN, ABN, TRN, and tax-exempt invoicing. Get POS support for in-store sales and 24/7 customer support when you have a question or need to set up a custom workflow.
4. LOVAT Compliance
- Free trial: Free to install, cannot submit sales tax returns
- Price: Free to install, Start-up Plan $40/monthly or $35 per month when billed annually, Standard Plan $80/monthly or $65 per month billed annually, plus add-ons including auto tax return submissions, additional transactions, fees for monthly total transactions over $100,000, and support consultations (billed hourly), Premium Plan $550 when billed monthly, $495 when billed annually
- Shopify app store link: LOVAT Compliance
LOVAT Compliance isn’t just for EU companies. If you are interested in selling or storing your products abroad or participating in the Amazon PAN-EU program, the software can help you apply for your VAT registration. LOVAT is available for 57 countries and getting your VAT registration is quick with only a few online forms to fill out. However, keep in mind that getting your VAT number can take up to 12 weeks.
Once you have your VAT number, LOVAT Compliance can accurately calculate VAT on products and services, file VAT returns, and provide reminders to pay taxes regardless of the number of countries you do business in and the number of marketplaces you sell on.
Seamlessly integrate transaction data from your selling sites to LOVAT with intuitive APIs. And safely store this data offline or on a separate server with easy access through the Google Cloud Platform.
- Free trial: 5 days
- Price: $4.99 per month
- Shopify app store link: Exemptify
Exemptify features +VAT and exclude VAT pricing while selling VAT-free to international customers. The platform uses a Geo IP database to display correct prices based on the customer’s physical address.
VAT pricing can be customized to your theme including size, color, font, etc.
Tip: If you change the theme and the VAT display is not to your liking, Exemptify will fix it for free.
Easily handles EU B2B transactions and EU VAT ID validation for automatic VAT deduction. Follows EU tax regulation updates (July 1, 2021) and ensures compliance and transparency by showing and charging accurate VAT rates. The app is also GDPR compliant (no customer data is stored) and works with the Shopify Buy Button for use on non-Shopify websites or blogs.
However, unlike one-click tax apps that integrate with Shopify, Exemptify requires a bit more setup. It offers a step by step set up assistant that helps you copy 1-3 code snippets to your theme. If any of the steps seem overwhelming, Expemptify’s customer support is happy to help.
6. Tax Rex
- Free trial: 15 days
- Price: Free (up to 30 orders per month), $5 a month for up to 200 orders, $0.02 per additional order, $10 per month for up to 1,000 orders per month, $0.01 for additional orders
- Shopify app store link: Tax Rex
Whether you have one Shopify store or multiple, with Tax Rex you can generate sales tax reports for filing taxes and remain compliant for all states and individual counties in the U.S. Tax Rex automatically generates an economic nexus entry when you make your first sale in a new state. If a Shopify order has a refund or edit request, Tax Rex will keep your taxes updated so you don’t collect too many or too few taxes.
Although Tax Rex can account for B2B and wholesale tax adjustments, Tax Rex uses Shopify data for its reports. Therefore, it does not modify how Shopify collects taxes. Tax reports are automatically generated daily or in real-time within the app.
Keep in mind, Tax Rex currently only works for taxes collected within the United States. Small businesses that sell internationally will need to choose a Shopify tax integration that reflects foreign languages, currencies, and tax laws.
- Free trial: Yes, see website for more information
- Price: Free Plan, Premium Plan $10 per month, $8.34 billed annually, Pro Plan $16.67 billed annually, Enterprise Plan (contact for pricing)
- Shopify app store link: Hurdlr
Once you link your Shopify store to Hurdlr, it is like having your own personal accountant working for you 24/7. Hurdlr tracks all of your Shopify sales, expenses, and tax deductions in real-time. Plus, you can easily view your profits directly from your smartphone or tablet. Already have an accountant? Hurdlr makes it easy to share your tax information too.
In paid plans, you can track mileage for business trips automatically. The Hurdlr app uses your phone’s GPS when your vehicle starts and stops. Once recorded, tag the trip as business and it will add it to your expense records.
However, keep in mind that the Hurdlr auto feature might classify personal expenses as a business so if you don’t keep separate business accounts, it could be confusing to follow. Plus, the Pro plan doesn’t allow monthly billing so if you are not prepared to pay annually, you might have to look elsewhere for software that has a monthly billing option.
8. Zonos Duty and Tax
- Free trial: n/a (demo available)
- Price: Contact Zonos for custom pricing. Fees may include a monthly subscription and initial setup.
- Shopify app store link: Zonos Duty and Tax
Zonos Duty and Tax accurately calculate landed costs and shipping costs for all of your international customers. Landed cost includes duty, VAT (UK and EU), brokerage, disbursement, bond, and ancillary.
Tip: To take advantage of this feature, you must be running Advanced Shopify or higher (landing cost does not work with Shopify Basic).
Shipping calculations include your company rate via USPS, UPS, FedEx, and DHL with carrier API integrations. Actual shipping cost and duty cost are separated at checkout so your customer is informed of charges line by line. Utilize Zonos Hello to welcome customers in their native language. Customers also have the option to prepay duty and tax which helps you successfully deliver more packages and clear customs faster.
9. Shopify Connector by Intuit
- Free trial: n/a
- Price: Free with a QuickBooks subscription
- Shopify app store link: Shopify Connector by Intuit
Already a QuickBooks user? Shopify Connector by Intuit is a free app for QuickBooks subscribers that automatically syncs your data between Shopify and QuickBooks Online Accounting software.
Integrating Shopify sales into QuickBooks is a seamless process. All of your Shopify orders and refunds show up as sales receipts within your QuickBooks dashboard. QuickBooks integrates with over 650 apps so you automate the majority of your daily business tasks.
You can easily keep track of inventory and eliminate human error by automating data collection such as invoices, customer information, and product descriptions. Inventory is kept up-to-date in real-time so you never run out of product. QuickBooks even claims you can save over 160+ hours a month, just by activating this app.
Utilize the power of Quickbooks by automating recurring payments for vendors, taking photos of expense receipts, and one-click reporting of profit & loss, balance sheets, etc.
Plus, if you sell on multiple platforms like eBay and Amazon, you can automatically link those purchases with QuickBooks just by using the Shopify Connector app. Setup custom workflows within the app so you can tailor the app to your specific business needs.
10. Dual Price Display PRO
- Free trial: 7 days
- Price: $14.99 per month
- Shopify app store link: Dual Price Display PRO
Dual Price Display PRO helps you display the prices of your products including VAT tax and excluding VAT tax. Great for solidifying relationships with B2B and B2C customers who need to view both pricing structures. The app is very intuitive and you can easily add it to your Shopify store in a matter of minutes. Customer service is responsive and will help you with custom code if you decide to change shop themes.
You can also customize options such as which price will display first, which prices show, tax rate, size display ratios, colors, etc. Both prices (including VAT tax and excluding VAT tax) are shown in search results and pricing is optimized for mobile view. With one click, you can turn on and off the app if you need to make a tax rate change or other customizations.
Question: How do I Manage Sales Tax on Shopify?
Answer: In five easy steps, you can collect sales tax from your Shopify store.
From your admin panel, go to Settings > Taxes.
Locate the Tax regions sections. Right beside the United States option, click Set up and then Edit.
Click Collect sales tax
Update account numbers and regions.
Click Collect sales tax.
Question: Does Shopify Automate Sales Tax?
Answer: Once your sales tax collection is set up in Shopify, the platform’s built-in tax engine with automatically collect sales tax. It will even collect sales tax if you have nexus in more than one territory.
However, installing a third-party tax app is recommended to have advanced features including detailed reports, filing reminders, and international tax help.
Question: Do I Need a Tax ID Number for Shopify?
Answer: If you are planning on registering your business or already have a tax ID, you can provide it for your Shopify store. You can also operate your Shopify site as a sole proprietor in which a tax ID is not necessary.
Question: Does Shopify report to IRS?
Answer: Shopify is required to report to the IRS regarding all of their account holders and their respective transactions. However, you must meet the minimum requirements to receive a 1099-K from Shopify. Even if a form is not received, you still must report your income revenue to the IRS from Shopify.
Question: Do I Need to Collect Tax in Every State Shopify?
Answer: As a shop owner, you will need to collect sales tax from transactions in every state you have sales tax nexus through on every marketplace you sell on.
Which Shopify tax App Integration is Right for Your Business?
Whether you only use Shopify for eCommerce or sell on several platforms such as Amazon, eBay, and Walmart, tax app integrations are essential for collecting transaction data, calculating taxes based on rate and location, and providing a seamless experience for both you as a business owner and the customer.
While all ten apps above are worth a look, I recommend the following apps based on the size and software needs of your business. For small businesses and startups, I recommend using TaxJar. The platform has a 30-day trial, affordable plans that can scale as your business grows, and a flexible API to thoroughly customize the software to your company needs.
Larger businesses that have already invested in a QuickBooks subscription can benefit more from Shopify Connector by Intuit. The free app automatically syncs Shopify data into QuickBooks online, while keeping track of inventory across multiple platforms. Essential custom workflows are quick to set up and streamline business processes.