Running an online store on Squarespace? At some point, you'll need to tackle sales tax. While Squarespace provides built-in tax tools, knowing how to configure them correctly—and understanding your obligations—is crucial for staying compliant.

This guide walks through everything Squarespace sellers need to know about sales tax setup and compliance.

Does Squarespace Collect Sales Tax Automatically?

Squarespace provides automatic tax calculation for US sellers, but it's not completely hands-off. Here's what you need to understand:

What Squarespace Does

Calculates tax rates based on customer location
Applies the correct combined rate (state + county + city)
Shows tax separately on checkout and receipts
Tracks tax collected in your order reports

What Squarespace Doesn't Do

Register you for sales tax permits
File your tax returns
Determine if you have nexus in a state
Handle exemption certificates
Manage remittance to tax authorities

Bottom line: Squarespace helps you collect the right amount, but you're responsible for determining when you should collect and where you need to file.

Setting Up Sales Tax in Squarespace

Step 1: Enable Tax Collection

Go to Commerce → Taxes
Toggle on automatic tax calculation
Squarespace will use your business address as the default origin

Step 2: Configure Your Business Location

Your business address matters for:

Origin-based states (tax based on where you ship from)
Nexus determination
Return filing requirements

Enter your actual business location, even if you work from home.

Step 3: Choose Tax Regions

Squarespace lets you specify which regions to collect tax:

US Automatic: Uses TaxJar's rate database
Manual Rates: Set your own percentages
No Tax: For tax-free products or regions

For most US sellers, the automatic option is the safest choice—rates update automatically when laws change.

Step 4: Set Up Tax Exemptions (If Needed)

Some products may be tax-exempt in certain states:

Food items
Clothing (in some states)
Digital products (varies widely)

You can create product-level tax settings if you sell a mix of taxable and exempt items.

Understanding Nexus for Squarespace Sellers

Before collecting sales tax, you need to establish nexus—a connection to a state that requires you to collect tax there.

Physical Nexus

You have physical nexus if you:

Live in the state
Have employees there
Store inventory there
Attend trade shows or pop-ups

Economic Nexus

Most states now have economic nexus thresholds. If you sell over a certain amount into a state, you must collect tax even with no physical presence.

Common thresholds:

$100,000 in sales, OR
200 transactions

Each state sets its own rules. Some use only dollar amounts; others use only transaction counts; most use both.

What This Means for Squarespace Sellers

When you're just starting out, you likely only need to collect tax in your home state (where you have physical nexus).

As you grow and cross economic thresholds in other states, you'll need to:

Register for a sales tax permit in that state
Configure Squarespace to collect tax there
File returns according to that state's schedule

State-by-State: What Squarespace Sellers Should Know

States Without Sales Tax

Five states have no statewide sales tax:

Alaska (but local taxes may apply)
Delaware
Montana
New Hampshire
Oregon

If you ship to customers in these states, you generally won't collect sales tax.

Origin vs. Destination States

Origin-based states (few): Tax rate based on where you ship from

Arizona, California (partial), Illinois, Mississippi, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginia

Destination-based states (most): Tax rate based on where the customer is located

Squarespace's automatic tax handles this for you, but understanding the concept helps when reviewing reports.

States With Specific Rules

California: Has both state and district taxes, plus complex sourcing rules. Tax configuration can be tricky.

Colorado: Home rule cities can set their own rates and rules, creating compliance complexity.

New York: Clothing under $110 is exempt, requiring product-level settings.

Filing and Remitting Sales Tax

Collecting tax is only half the job. You also need to file returns and remit the money to state authorities.

Filing Frequency

States assign filing frequency based on your sales volume:

Monthly: High-volume sellers
Quarterly: Medium-volume sellers
Annual: Low-volume sellers

You'll receive your filing schedule when you register for a permit.

Using Squarespace Reports

Generate tax reports to prepare your filings:

Go to Analytics → Sales
Export order data for your filing period
Break down tax by state (Squarespace shows this in order details)

Filing Deadlines

Most states follow predictable schedules:

Monthly: Due around the 20th of the following month
Quarterly: Due by the end of the month following the quarter
Annual: Due by January 31

Important: Some states require filing even if you collected $0 in tax. Missing a zero-dollar filing can trigger penalties.

Common Squarespace Tax Setup Mistakes

Mistake 1: Not Enabling Tax at All

Some sellers skip tax collection because it seems complicated. This creates liability that compounds over time.

Solution: At minimum, enable tax collection for your home state immediately.

Mistake 2: Collecting Tax Without Permits

Collecting sales tax without being registered is technically illegal in most states. You're taking money you may not be authorized to collect.

Solution: Register for permits before enabling collection in each state.

Mistake 3: Using Manual Rates

Manually entered tax rates go stale when laws change. Rate changes happen frequently—sometimes multiple times per year.

Solution: Use Squarespace's automatic tax calculation whenever possible.

Mistake 4: Forgetting About Shipping

Many states tax shipping charges. Squarespace's automatic tax should handle this, but verify by checking test orders.

Mistake 5: Ignoring Economic Nexus

Your Squarespace store can trigger economic nexus in multiple states quickly, especially if you sell higher-priced items.

Solution: Review your sales by state quarterly. Tools like Sails can track this automatically.

Squarespace Tax Settings Checklist

Before you launch (or as soon as possible):

Enable automatic tax calculation
Enter correct business address
Register for sales tax permit in home state
Enable tax collection for home state
Set up product-level exemptions if needed
Run a test order to verify tax appears correctly

As you grow:

Track sales by state monthly
Monitor economic nexus thresholds
Register for new permits when thresholds are crossed
Add new states to your tax collection settings
Keep records of all registrations and filings

Handling Tax-Exempt Customers

Some customers may be tax-exempt:

Resellers with valid certificates
Nonprofits
Government agencies

Squarespace doesn't have built-in exemption certificate management. For exempt sales:

Collect the exemption certificate directly
Store it securely (digital or paper)
Process the order without tax (manual adjustment or discount code)
Note the exemption reason in order notes

If you have many exempt customers, consider a dedicated tool for certificate management.

Digital Products on Squarespace

If you sell digital products (downloadables, courses, memberships):

Know the Rules

Digital product taxation varies dramatically by state:

Some states don't tax digital goods at all
Others tax everything digital
Many have complex rules by product type

Configure Product Settings

In Squarespace, you can set products as digital and configure their tax treatment separately from physical goods.

Track Carefully

Digital sales still count toward economic nexus thresholds, even if the products aren't taxable in that state.

When to Get Additional Help

Squarespace handles the basics well, but consider additional tools or professional help when:

You sell in 10+ states
You're approaching economic nexus thresholds
You sell a mix of physical, digital, and subscription products
You've received a notice from a state tax authority
You need to track nexus exposure across multiple platforms

Next Steps

Audit your current setup: Is tax enabled? Is it configured correctly?
Check your home state registration: Are you registered and filing?
Review your sales geography: Where are your customers located?
Plan for growth: Set up monitoring before you hit nexus thresholds

Selling on Squarespace and want to track your nexus exposure automatically? Try Sails to monitor your sales across states and know exactly when you need to act.

Squarespace Sales Tax Setup: Complete Guide for Online Sellers