Understanding Tax Calculation and Autofiling

Tax Calculation

Data Sync: As you conduct transactions through your Shopify store, Sidr Tax continuously syncs this data in once a day. This includes sales, shipping fees, and any other taxable charges associated with each transaction.

Note: Upon first time set up it may take up to two hours to sync up to a years worth of historical data.

Applying Accurate Tax Rates: Sidr Tax uses State/County/City jurisdiction location and other relevant data to determine the precise tax rate applicable to each sale, based on the customer's location and the nature of the product sold. This is crucial because tax rates can vary significantly across different jurisdictions.

Handling Exemptions and Special Rules: If there are any tax exemptions (e.g. for resellers, certain products, or specific customers), Sidr Tax automatically applies these during the calculation process. The app is also updated regularly to reflect changes in tax laws, ensuring compliance with new regulations and special tax rules.

Tax Remittance

Once taxes are calculated, Sidr Tax facilitates the remittance process:

Tax Reporting: Sidr Tax compiles comprehensive reports detailing the total tax collected, broken down by jurisdiction. These reports are crucial for filing accurate tax returns and understanding your tax liabilities.

AutoFiling Option: For users who opt in, Sidr Tax can automate the tax filing process. This feature includes submitting tax returns and remitting the collected taxes to the appropriate tax authorities on behalf of your store. For states that you have elected for Autofiling that have been validated Sidr Tax will begin filing between the 5th-15th of each month.

To learn more about how to setup Autofile, review this article.

Backfiling Support: If there are any past periods where taxes were not properly collected or remitted, Sidr Tax can assist with backfiling. This ensures that users remain compliant with past tax obligations as well.

Advantages of Using Sidr Tax

Time-Saving: Automation of tax calculations and filings saves significant time for store owners, allowing them to focus more on their business operations rather than tax compliance.

Accuracy and Compliance: With automatic updates and real-time data integration, Sidr Tax ensures that your tax calculations are always based on the latest tax laws and rates, minimizing the risk of errors and penalties.

Financial Insight: Detailed reports provided by Sidr Tax give you a clear view of your tax obligations, helping you manage your finances more effectively and plan for future tax payments.

Updated on: 05/02/2024