Setting up your taxes can be a bit challenging, however, it is an necessary step and we're required to do so by law. When using Shopify within the USA, automatic tax rates are available. Even though this is a great feature, there are some differences between how Shopify and Printful's taxes work.
When you're setting up tax rates on Shopify, you are asked to add a physical presence. Since Printful is your fulfillment service, the address you add would be ours. The automatic tax rate Shopify offers is zip code based. The amount charged is 7.5% on each order. This is the statewide tax rate. However, in most areas of California, local jurisdictions have added district/city taxes that increase the tax owed by a seller. Those district/city tax rates range from 0.10% to 2.00%. Some areas may have more than one district/city tax in effect.
You might be wondering- if the California statewide tax is 7.5%, what tax does Printful charge? That's a great question! See, as we mentioned, there are not only statewide taxes, but district/city taxes. These vary and can go up to 2.00%. If Printful charged you only the 7.5%, your end customer would be responsible for the remaining district/city taxes. To avoid any problems, we are taking care of all the possible district/city taxes by charging you. The math is simple- we charge you 7.5%+ the district tax that is calculated for each address on your order.
So in a nutshell, Shopify calculates the statewide tax (7.5 %) but Printful calculates the statewide tax and additional district/city taxes.
We believe it is the best practice as it completely frees your end customer of any responsibilities regarding their taxes. By covering your end customer's district/city tax you show them that your business is reliable and deeply cares for its customers.
Like we said- we want to make this as easy as possible for you. That's why we've done all the math- so that you don't have to. We have your back!
To get things set up have a look at our video tutorial here: Printful tax settings in Shopify