Introduction
Selling in person using Shopify POS? Then you’re not just a merchant you’re a business owner in the eyes of the IRS and your state.
Whether you’re operating from a boutique, pop-up stall, or mobile cart, if you’re using Shopify POS to accept payments in 2025, the IRS expects formal business registration, tax ID setup, and sales tax licensing. Without it, you risk fines, bank issues, and lost deductions.
This guide walks you through how to properly register your business, step by step, so your Shopify POS operations are compliant and built to grow.
IRS Tax Code References
- IRC §6012 – Business filing requirements
- IRC §6041 – Reporting rules for payment processors (1099-K)
- IRC §6001 – Recordkeeping and EIN reporting for businesses
- IRC §162 – Deductible business formation expenses
Relevant IRS Forms
- Form SS-4 – Apply for an EIN (Employer Identification Number)
- Form 1040 with Schedule C – File taxes as a sole proprietor
- Form 2553 – Elect S Corporation status (optional)
- State Business License Applications – Varies by state
- Sales Tax Permit Applications – Required for POS sales in most states
Example: Shopify POS Business Registration Journey
Example: Sara opens a pop-up clothing shop using Shopify POS in Austin, TX.
In 2024:
- She starts by selling as a sole proprietor but realizes she needs legal structure
- Registers her business as an LLC in Texas
- Applies for a Texas Sales Tax Permit and an EIN using Form SS-4
- Begins filing monthly sales tax returns and quarterly estimated taxes
- Deducts her registration fees and Shopify POS costs under IRC §162
Step-by-Step Guide to Register Your Shopify POS Business in 2025
- Choose a Legal Business Structure
Select from:
- Sole Proprietorship – Easiest, but no liability protection
- LLC – Offers liability protection and tax flexibility
- S Corporation – Tax-efficient if profits exceed $60,000+
Check your state’s requirements and future growth plans before deciding.
- Register Your Business with the State
File formation documents with your Secretary of State (e.g., Certificate of Formation for LLCs). Fees vary from $50-$300. - Apply for an EIN (Employer Identification Number)
File Form SS-4 on the IRS website. Even sole proprietors should get an EIN for:
- Bank accounts
- Employer payroll
- Shopify Payments setup
- W-9 or 1099 issuance
- Register for Sales Tax Permit
Most states require Shopify POS sellers to collect and remit sales tax. Apply online with your state’s Department of Revenue.
Tip: Some states (like FL and CA) require filing even when no tax is collected.
- Open a Business Bank Account
Keep personal and business income separate. This improves audit protection and simplifies accounting. - Set Up Shopify POS to Collect Sales Tax
In your Shopify dashboard:
- Go to Settings > Taxes > Manage Sales Tax
- Add your state tax ID and select POS as the collection channel
- Track Startup and Registration Costs
Expenses like LLC filing fees, legal consultations, and initial Shopify POS setup are tax-deductible under IRC §162. - Maintain Business Licenses and Renewals
States and cities often require annual renewal of business licenses. Track deadlines and compliance notices. - File Estimated Taxes
If you expect to owe $1,000+ in federal tax, pay quarterly using Form 1040-ES. - Stay Audit-Ready with Good Records
Use bookkeeping software (QuickBooks, Xero) to track:
- POS income
- Tax payments
- Deductible expenses
- Tax filings
Conclusion
Selling with Shopify POS may feel like a small operation but tax authorities see it as a business. Proper registration and compliance in 2025 can protect your profits, reduce your taxes, and give you the structure needed to grow.
Don’t wait until tax season to get registered. Build your foundation right from day one.
Call to Action
Confused about how to register your Shopify POS business the right way? Unsure which structure (LLC, S Corp, Sole Prop) suits your situation best?
Schedule a call with Anshul Goyal, CPA, EA, FCA
Anshul will walk you through:
- Which legal entity makes the most tax sense
- How to register for sales tax permits
- When to apply for an EIN
- What deductions are available to new businesses
- How to avoid IRS red flags as a new seller
Book your consultation now: https://calendly.com/anshulcpa/
Start your business the right way with guidance from a tax expert.
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Do I need to register a business if I sell using Shopify POS?
Yes. Most states require formal registration and sales tax permits even for small POS sellers.
2. Can I deduct my LLC registration costs?
Yes, under IRC §162, business startup and registration fees are deductible.
3. Do I need an EIN to open a business bank account?
Yes. Most banks require a federal EIN for business accounts.
4. What happens if I don’t collect sales tax?
You may face penalties, interest, and backdated tax collection in most states.
5. Do I need to file taxes if I only sell locally using POS?
Yes. You must report all income, even if it’s from local or cash sales.