Selling on your own Shopify store: fees, Shopify Payments, sales tax, 1099-K, foreign-owned LLCs and tariffs (2026)

Amazon, Walmart, Etsy and TikTok Shop are marketplaces: the customer buys on the platform, and the platform collects and remits sales tax under each state's marketplace facilitator law. Shopify is a tool for building a store and taking payments; the customer buys from your store, and you are the seller of record. Sales tax, refunds, chargebacks, customer data and traffic are all yours.

Treating Shopify as "just another marketplace" and assuming someone else remits the tax is the most common tax gap we see in independent stores. The table below shows who does what.

Description: each row is a task, comparing a Shopify store with marketplaces such as Amazon, Walmart and TikTok Shop; the last column is where sellers slip.

Task	Shopify store	Marketplaces (Amazon, Walmart, Etsy, TikTok Shop)	Where sellers slip
Seller of record	You (except Shop channel orders and Managed Markets international orders)	You sell; the platform is the marketplace facilitator	Assuming Shopify is a marketplace
Calculating and collecting sales tax	Shopify Tax, per your settings	The platform	Shopify won't collect in states you haven't turned on
Registering and filing	You	The platform remits; some states still want marketplace sales on your return	Collecting tax and never sending it to the state
Traffic	Your own ads and content	Built-in platform traffic	Ad spend missing from the margin math
Customer data	Yours	The platform's; sellers see little	—
Chargebacks and fraud	Yours; $15 per chargeback on Shopify Payments	Platform rules	Chargebacks and fees not netted against revenue
1099-K	One per payment processor	One from the platform	Adding several 1099-Ks together

• Shop channel is the exception: for orders placed in Shopify's Shop app (the Shop channel), since January 1, 2025 the Shop channel collects, remits and files sales tax on orders shipping to or within the U.S., reported under SC Commerce Services Inc., with the tax deducted from your Shopify Payments payouts. Orders paid with Shop Pay at your own store's checkout are not included.
• "Managed" U.S. sales tax for new stores: Shopify's Help Center describes this as early access for some stores opened after October 27, 2026 that are U.S.-based, use Shopify Payments and publish products to Shop; it is on by default for eligible stores. Online orders are processed through the Shop marketplace and Shopify collects and remits the tax; POS, B2B and third-party app orders remain yours to register, collect and file. Existing stores aren't covered.
• Meta stopped collecting: since August 26, 2025, Meta (Facebook and Instagram checkout) no longer acts as a marketplace facilitator, so later Meta orders are the seller's responsibility.

As of November 2026, Shopify's main U.S. plans are Basic, Grow and Advanced at $29, $79 and $299 a month billed yearly, or $39, $105 and $399 billed monthly; Plus starts at $2,300 a month. U.S. online card payments through Shopify Payments cost 2.25%–2.9% + 30¢; with a third-party gateway Shopify adds a 0.2%–2% transaction fee. Themes, apps, domains and ads are extra.

Description: each row is a plan, with the monthly fee, the Shopify Payments U.S. online card rate, the in-person rate and the extra transaction fee when you use a third-party gateway.

Plan	Monthly fee (yearly / monthly billing)	Online cards (Shopify Payments)	In person	Third-party gateway fee
Basic	$29 / $39	2.9% + 30¢	2.6% + 10¢	2%
Grow	$79 / $105	2.7% + 30¢	2.5% + 10¢	1%
Advanced	$299 / $399	2.5% + 30¢	2.4% + 10¢	0.6%
Plus	From $2,300	2.25% + 30¢	2.3% + 10¢	0.2%

• International cards add 1%: cards issued outside the U.S. cost 1% more online through Shopify Payments, and currency conversion has its own fee.
• Third-party gateways: with PayPal or another gateway you pay that gateway's fee plus Shopify's transaction fee for your plan. Shopify's Help Center also says that when you run Shopify Payments alongside a third-party provider, Shopify Payments transactions (including Shop Pay) carry a 1.25% premium on top of the standard rate. Check the admin before you switch anything on.
• Starter plan: $5 a month with limited features, aimed at selling through social media and links; check the current terms.
• Apps and themes: reviews, subscriptions, marketing, ERP and channel-sync apps are mostly monthly; paid themes are one-time. All are business expenses, booked from the invoices.
• No commission: unlike marketplaces, Shopify takes no category referral fee. But you buy your own traffic, and ads are often a store's largest expense.
• Trials: a short free trial is usually followed by a few discounted months; terms change, so read the sign-up page.

Shopify Payments in the U.S. requires a physical business address in the 50 states or Puerto Rico where operations primarily occur, a U.S. dollar checking account that accepts ACH (no savings accounts), the company's EIN, and an SSN or ITIN for the representative and owners of 25% or more; non-U.S. residents can provide a passport photo instead. For mainland China entities, Shopify Payments is invitation-only early access as of November 2026, for cross-border sales only, with payouts through WorldFirst. Sellers who can't use it run PayPal or another gateway.

Description: each row is a type of seller, with Shopify Payments eligibility, what to prepare, and the usual fallback.

Seller	Shopify Payments	What to prepare	Fallback
U.S. resident (individual or U.S. company)	Yes	SSN or EIN; U.S. address; U.S. checking account; ID	—
U.S. LLC or corporation with a foreign owner	Can apply; the documents must hold up	EIN letter (CP 575 or 147C); a real U.S. business address (an RA address may not pass); U.S. checking account; SSN, ITIN or passport for the representative and 25%+ owners	PayPal or another gateway until approved
Mainland China company	Invitation-only early access	Mainland entity; WorldFirst account with HKD and USD payouts; cross-border only, no sales to mainland China customers	PayPal and other processors that serve Chinese sellers
Hong Kong company	Shopify Payments Hong Kong, under Hong Kong rules	Check the Hong Kong requirements	Same

• The address must be real: Shopify wants the physical address where the business primarily operates, proven with a utility bill, bank or card statement, insurance statement, tax notice or registration document issued within the last six months. A registered agent address exists to receive legal papers and may fail as a business address.
• EIN documents: the IRS CP 575, 147C or SS-4 confirmation letter; IDs must be original photos, not scans or screenshots.
• Representative: a single-member LLC's owner must be the representative; multi-member LLCs and corporations name an owner or executive.
• Shop Pay: Shopify's accelerated checkout, running on Shopify Payments; Shop Pay Installments comes from a lending partner. It helps conversion but doesn't change who the seller is.
• PayPal: U.S. PayPal Checkout costs 3.49% plus a fixed fee (PayPal fee page updated May 19, 2026), more for international buyers, and on Shopify you add Shopify's third-party fee.
• Stripe: Stripe processes Shopify Payments in the U.S. behind the scenes. Stores that take payments on Stripe directly, outside Shopify, generally use Stripe Tax (see yclcpa.com/stripetax).
• Payouts and chargebacks: chargebacks come out of the next payout, with a $15 fee per U.S. chargeback that is returned if you win. Stores with many disputes may see delayed payouts or reserves.

Because Shopify Tax only calculates and collects: it works out tax from the buyer's address and product category and collects it at checkout in the states you've turned on, and the tax liability page flags states where your Shopify sales may have crossed a threshold. It doesn't register you with any state, and the tax it collects is yours to report and pay on time. As of November 2026, Shopify's automated filing is closed to new enrollment.

Description: each row is a sales tax task, with whether Shopify does it, the cost, and what is left for you. For the Stripe Tax comparison, see yclcpa.com/stripetax.

Task	Does Shopify do it?	Cost	What's left for you
Calculate by address and collect at checkout	Yes, only in states you turn on	First $100,000 free, then 0.35% per transaction (Plus 0.25%), capped at $0.99 per order	Register first, then turn the state on; categorize products
Flag possible nexus	Yes, from Shopify sales and the locations you add	Included	Add Amazon, TikTok Shop, wholesale and in-person sales; judge physical presence from inventory
Register with states	No	—	You or your CPA
File and pay	Automated filing only for stores already enrolled ($75 a return, Plus $50); closed to new stores	—	File yourself, use a third-party app, or hand it to a CPA
Shop channel orders	Collects, remits and files (since 2025-01-01)	—	Some states still want them on your return
Managed U.S. sales tax for new stores	Early access for some stores opened after 2026-10-27	First $100,000 free, then Shopify Tax rates	POS, B2B and third-party app orders stay yours

• The free allowance: stores created before May 13, 2026 get $100,000 free per calendar year, then 0.35% per transaction, capped at $0.99 per order and $5,000 per region per year; stores created on or after May 13, 2026 get $100,000 over the store's lifetime, with no annual cap listed. Fees apply only where you've turned collection on.
• Nexus thresholds: most states require registration once your sales into the state exceed $100,000 a year ($500,000 in California, Texas and New York); North Carolina since July 1, 2024 and Illinois since January 1, 2026 look only at dollars. Inventory, employees or an office in a state create nexus from day one, regardless of sales.
• Foreign sellers too: state economic nexus rules don't exempt a seller because it is in China. A seller shipping directly from China that crosses a state's threshold is expected to register under that state's law.
• Collected tax isn't revenue: it's money owed to the state and belongs on the balance sheet as a liability. The Shopify Payments 1099-K may include it in the gross amount, so take it out for income tax.
• North Carolina rules: see yclcpa.com/salestax.

Many sellers manage products and inventory in Shopify and push them to Amazon, Walmart and TikTok Shop. Marketplace orders are taxed by the marketplace, but two things spill over to your store: inventory in a platform's warehouses gives you physical presence in those states, so your own store must collect there; and some states count marketplace sales toward their thresholds.

• Marketplace Connect: Shopify's own channel app covers Amazon, Walmart (U.S.), Target Plus (U.S.) and eBay; new Etsy connections aren't available. The first 50 synced orders a month are free, then 1% per order, capped at $99 a month.
• TikTok Shop: the TikTok channel app syncs Shopify products to TikTok Shop; TikTok Shop orders are taxed by TikTok as the marketplace facilitator, not filed through Shopify Tax (see yclcpa.com/tiktok).
• FBA inventory: Amazon spreads stock across state warehouses and you have physical presence wherever it sits. With inventory in California, your store's California orders are taxable from the first sale, not from $500,000 (see yclcpa.com/fba).
• Do marketplace sales count?: it varies. Some states count only your direct sales, some include marketplace sales, and once you're registered some want the marketplace sales reported on the return.
• One set of books, split by channel: Shopify, Amazon, TikTok and Walmart revenue in the same company goes in one ledger by channel, so nothing is doubled or missed.

When you sell abroad yourself through Shopify Markets, you remain the seller and may need to register for EU or UK VAT or Canadian GST/HST. Stores based in the continental U.S. can turn on Managed Markets, where Global-e becomes merchant of record for international orders, registers, remits tax, handles duties and provides DDP labels, for 3.5% of international orders (3.25% on Plus). Domestic orders don't change.

• Requirements: Basic plan or higher, an online store, Shopify Payments, and a business in the continental U.S. (or certain stores in Canada and the U.K.). Stores in mainland China can't use Managed Markets.
• Bookkeeping: on Managed Markets orders Global-e is the seller and you receive a settlement; book them from the agreement and settlement reports, separate from domestic orders.
• Foreign income tax: selling into a country generally doesn't create local income tax, but warehouses or staff there need a separate look.

The $800 de minimis exemption ended for mainland China and Hong Kong on May 2, 2025, was suspended for all countries on August 29, 2025, and its legal basis is repealed from July 1, 2027; CBP wrote the suspension into its regulations in June and July 2026. Parcels shipped straight from China to U.S. customers now clear customs and pay duty. Under DDU the customer pays on delivery; under DDP you or your forwarder pay first. Whoever pays is importer of record (IOR), and duty refunds and customs liability follow the IOR.

Description: each row is a shipping method, with the importer of record, the customer experience, how duty is booked, and what to watch. Duty rates follow the latest CBP and USTR notices.

Method	Importer of record	Customer experience	Booking the duty	Watch for
DDU (customer pays duty)	Usually the customer	Duty and fees demanded at the door; refusals and bad reviews	No duty on your books	Return costs on refused parcels; chargebacks
DDP through a forwarder ("tax-included")	The forwarder or its designee	Good, price includes duty	The forwarder's duty charge goes into cost	Refunds and liability sit with the forwarder; keep the paperwork
DDP with your U.S. company as importer	Your U.S. company	Good	Duty from the entry summary into inventory cost	CBP importer registration; formal entries (generally over $2,500) need a customs bond
Bulk into a U.S. warehouse, then ship	Your company or the forwarder	Best, fast delivery	Duty into inventory cost	Physical presence in the warehouse state for sales and income tax

• Tariff layers: as of November 2026, the IEEPA tariffs were stopped by the Supreme Court on February 20, 2026, and importers of record can claim refunds through CBP; Section 301 tariffs on Chinese-origin goods remain. The full timeline and refund treatment are at yclcpa.com/fba.
• Show duty in the price: under DDP, build duty into the price or charge it separately in Shopify, and say so at checkout so customers don't feel overcharged.
• Only the importer gets refunds: when a forwarder ships DDP, duty is in the forwarder's name and so is any refund; you settle with the forwarder under your contract.
• Inventory cost: purchase price, inbound freight, duty and brokerage go into inventory and are deducted as cost of goods sold when sold, not all in the year paid.

Shopify sold its logistics business to Flexport in 2023; today's Shopify Fulfillment Network is an app that connects you to third-party warehouses, with Flexport as the main partner. Whichever warehouse you use, inventory in a state gives you physical presence there and may require sales tax registration and state income or franchise tax.

• Keep inventory reports: warehouse receiving and inventory reports show which states hold your goods; at year end you need quantities and values.
• P.L. 86-272 won't cover you: it protects only sellers whose in-state activity is soliciting orders; inventory in the state generally goes beyond that, and it doesn't apply to gross-receipts taxes such as the Texas franchise tax or Washington B&O.
• Self-fulfillment: shipping from your own warehouse or home makes that state your home state for sales and income tax.

Shopify Payments issues a 1099-K in January when your payments for the year exceed $20,000 and 200 transactions. It shows gross customer payments, before refunds, chargebacks and fees, and can include shipping and collected sales tax. PayPal and other processors issue their own. Book revenue at gross, then record refunds, chargebacks, processing fees, Shopify subscriptions and apps, and ads separately so the 1099-Ks reconcile.

• Lower state thresholds: Shopify lists 2025 state thresholds of $600 for Maryland, Massachusetts, Montana, Vermont, Virginia and D.C., $2,500 for Arkansas, $1,000 and 4 transactions for Illinois, and $1,200 for Missouri.
• Which TIN is used: Shopify reports individuals, sole proprietors and single-member LLCs under the SSN or ITIN, and other types under the EIN. Foreign-owned single-member LLCs most often get stuck here; see the next sections.
• De-duplicate processors: pull Shopify Payments, PayPal and Shop Pay Installments reports separately, and don't count PayPal money twice when it moves to another account (see yclcpa.com/1099k).
• Chargebacks: the disputed amount reduces revenue and the $15 fee is an expense; amounts won back are added back.
• Gift cards: a gift card sold is a liability until redeemed; revenue comes at redemption.
• Payouts are net: the bank sees money after fees, chargebacks and reserves; break each payout into its parts instead of treating deposits as sales.

A U.S. resident selling alone can start as an individual or single-member LLC, reporting on Schedule C with income tax plus 15.3% self-employment tax, and look at an S corporation once profit is steady. Foreign owners usually use a U.S. LLC or C corporation. The table below sets out four common cases; the full comparison is at yclcpa.com/entity.

Description: each row is a type of seller, with the usual entity, the federal filings, the tax form given to Shopify and processors, and what to watch.

Seller	Usual entity	Federal filings	Tax form	Watch for
U.S. resident (citizen, green card holder, resident alien)	Individual or single-member LLC; S corporation as profit grows	1040 Schedule C; S corporation 1120-S	W-9 (SSN or EIN)	15.3% self-employment tax; an S corporation pays a reasonable salary (yclcpa.com/scorp)
Foreign-owned single-member LLC	Wyoming or Delaware LLC	Pro forma 1120 + 5472; owner files 1040-NR if there is effectively connected income	Under the W-9 instructions the foreign owner generally gives a W-8 (yclcpa.com/w8ben)	Shopify reports single-member LLCs under an SSN or ITIN; many switch to a C corporation
Foreign company with a U.S. subsidiary	U.S. C corporation owned by the Chinese company or owner	1120 + 5472; 21% federal tax	W-9 (EIN)	Related-party pricing and §1059A import cost (yclcpa.com/subsidiary)
Multi-channel seller (Shopify + Amazon + TikTok)	One company for everything, or one per brand	By entity	Same entity details on every platform	Inventory and nexus across all platforms; one ledger by channel

• S corporations: foreign individuals and foreign companies can't be shareholders. A U.S. owner electing S status (Form 2553) pays a reasonable salary; see yclcpa.com/scorp.
• C corporations: 21% federal tax, and profit can stay in the company; dividends to foreign shareholders carry 30% withholding, generally 10% under the U.S.–China treaty (see yclcpa.com/ccorp).
• QBI deduction: U.S. residents with Schedule C or S corporation profit generally get the 20% qualified business income deduction, made permanent by OBBBA, subject to income and industry limits.

A U.S. LLC owned by one foreign person is disregarded for U.S. tax: it files pro forma 1120 + 5472 by April 15 each year by fax or mail, with a $25,000 starting penalty per missed form. Under the W-9 instructions, a disregarded entity with a foreign owner should have the owner give a W-8, not a W-9 under the LLC's EIN. U.S. inventory, employees or dependent agents may make the income effectively connected, and the owner then files Form 1040-NR. Many sellers therefore elect C corporation treatment on Form 8832 or form a C corporation. The full analysis is at yclcpa.com/walmart.

• Form 5472: a foreign-owned single-member LLC files whatever the amounts once there is any transaction with the owner (capital, expenses paid, loans); a U.S. corporation 25% or more foreign-owned attaches it to Form 1120 (see yclcpa.com/5472).
• Effectively connected income: goods in a U.S. 3PL or FBA warehouse, U.S. staff, or an agent who signs contracts for you generally mean a U.S. trade or business; shipping only from China with no U.S. office or people is a facts-and-circumstances call, including the permanent establishment rules of the U.S.–China treaty.
• Form 8832: an LLC can elect to be taxed as a corporation at 21% federal; after a change it generally can't change again for 60 months (Treas. Reg. §301.7701-3(c)(1)(iv)), though an initial election effective at formation isn't limited.
• Shopify and processor records: Shopify reports single-member LLCs under the owner's SSN or ITIN. An owner without an ITIN who has been using the LLC's EIN can end up with records that don't match; an LLC taxed as a corporation registers as a corporation. Settle this before launch.
• ITIN: foreign owners who need to file 1040-NR can apply for an ITIN with the return; YCL is an IRS Certifying Acceptance Agent (CAA), so we verify the passport and the original stays with you (see yclcpa.com/itin).

When a Chinese factory sells to the U.S. company it controls and the U.S. company sells on Shopify, those are related-party transactions. The purchase price must be arm's length (§482), the U.S. company's inventory cost can't exceed the customs value (§1059A), and each transaction type goes on Form 5472. A casual price lets the IRS reallocate profit and can bring penalties.

• Customs value and book cost should match: §1059A caps the cost basis of goods bought from a related party at the value used for customs.
• Keep paper: purchase agreements, a pricing memo and payment records; for larger volumes, consider transfer pricing documentation.
• Shareholder loans and expenses paid: ads or software paid by the parent for the U.S. company are related-party transactions too, booked and reported on Form 5472. Details at yclcpa.com/subsidiary.

Beyond sales tax, your formation state charges annual reports and fees, and inventory or staff in other states can require foreign qualification and that state's income or franchise tax. California's minimum franchise tax is $800 a year; Texas's no-tax-due threshold for 2026 and 2027 reports is $2,650,000, and companies under it still file an information report.

• Wyoming: LLC annual report from $60, due in the anniversary month; Delaware: LLCs pay $300 by June 1. State comparison at yclcpa.com/llc, annual report dates at yclcpa.com/annual.
• California: "doing business" there (inventory, sales above the threshold and so on) triggers the $800 minimum franchise tax, plus the LLC fee at higher revenue.
• Texas: companies with Texas nexus, including inventory in a Texas warehouse, file a franchise tax or information report by May 15 each year.

What you decide before launch shapes every year after it: whose name the store is in, how you get paid, where goods ship from, who imports them and which states need a sales tax registration. Work through this list in order.

Description: from top to bottom in order, each row is a decision, why it comes first, and who does it.

Step	Decision	Why	Who
1	Individual, LLC or C corporation	Decides the returns and whether you give a W-9 or W-8	You + CPA
2	Formation, RA, EIN; BE-13 within 45 days for a new foreign-owned company	Shopify Payments asks for EIN documents	YCL or you
3	U.S. business address and checking account	Shopify Payments asks for proof of address	You
4	Payment processors: Shopify Payments, PayPal or others	Different rates; each issues a 1099-K	You
5	Where goods ship from: China, a U.S. 3PL, FBA	Decides the importer, inventory states and nexus	You + forwarder + CPA
6	DDP or DDU, and who is importer of record	Who carries duty cost and refunds	You + customs broker
7	Which states need registration now	Inventory states have nexus from day one	CPA
8	Turn on registered states in Shopify Tax; categorize products	States not turned on collect nothing	You
9	Bookkeeping: reports for each processor, inventory cost	1099-K reconciliation, cost of goods sold	YCL or your bookkeeper
10	Compliance calendar: sales tax returns, annual reports, April 15 returns	Missed filings mean penalties	YCL

Example (hypothetical numbers, to show the method): Mr. Chen is a Chinese tax resident who owns 100% of a Wyoming LLC that has not elected corporate treatment. In 2026 he sells home goods on a Shopify store on the Grow plan ($79 a month billed yearly), with goods sent in bulk to a New Jersey 3PL and shipped from there. The same goods sell on Amazon FBA, and FBA stores some of them in California.

The math: if Mr. Chen assumed Shopify collects tax the way Amazon does, a year of uncollected tax in New Jersey, California and Washington, sales times rate, comes out of his own pocket, plus penalties and interest. One nexus review before launch costs far less than paying it later.

Pre-launch margin check (example, hypothetical numbers)

A $40 item: card fee at 2.7% + 30¢ is $1.38; purchase price $9.00; inbound freight $1.50; duty assumed at $3.00; 3PL pick-and-pack and last-mile $7.50; ads at 25% of price $10.00; returns and chargebacks at 4% $1.60; Shopify subscription and apps spread at $0.50 per unit. Pre-tax profit per unit is about $40 − $34.48 = $5.52, a margin of about 14%. An independent store pays no commission, but ad spend often costs more than a marketplace fee would; listing each line shows where the savings are.

Platforms change fees and rules often; each Seller Center's current notice decides. Foreign sellers who give a W-8 generally don't receive a 1099-K.

Start with who you are (U.S. resident or foreign owner) and where goods ship from, then look at which platforms you already sell on. Here are the common cases.

• Situation A: U.S. resident, new Shopify store. Start as an individual or single-member LLC on Schedule C; shipping from your own state, register there first; consider an S corporation once profit is steady.
• Situation B: Chinese owner with a U.S. LLC. Decide LLC or C corporation and W-9 or W-8 first; prepare EIN documents, a U.S. business address and a checking account for Shopify Payments; file pro forma 1120 + 5472 every year, plus a 1040-NR review if there is U.S. inventory.
• Situation C: Chinese company shipping direct from China. Use PayPal or another gateway, or the invitation-only Shopify Payments China; decide DDP or DDU and who imports; states whose threshold you cross still expect registration.
• Situation D: already on Amazon, adding Shopify. Find the states holding your FBA inventory and collect there on store orders; sync inventory with Marketplace Connect or an ERP; one ledger by channel.
• Situation E: selling for a year or two, never filed sales tax. Work out nexus and tax owed by state, look at each state's voluntary disclosure program, register and file back returns on the facts, and bring federal returns and Form 5472 up to date.