Calculating sales tax for your eCommerce site can be complicated a feel overwhelming.
Between calculating different states' sales base rates, keeping track of various tax holidays, and calculating hidden taxes your brain can start spinning with formulas, percentages, and rules. Magento has a relatively simple way of creating rules related to taxes and classes.
Adobe Commerce powered by Magento has built-in pages that can walk you through tax configuration settings, price display settings, tax rules, tax classes, fixed product tax, hidden tax calculations, tax zones and rates, value-added tax (VAT), and tax guidelines by country.
Utilizing the infrastructure provided by Magento is extremely helpful when setting your store's tax rules, but if you are still having trouble it is understandable. Even with guidance from Magento taxes can be complicated and you don't want to find out you are not compliant when it comes time to file your taxes.
At Briteskies, we partner with Avalara, a leading cloud-based tax compliance solutions provider, and use their Magento 2 extension, AvaTax, to help automate tax calculations.
Some of AvaTax's notable features include jurisdiction assignment, product taxability, address validation, cross border, CertCapture for eCommerce, reporting, VAT, and filing and remittance.
Since tax is calculated based on the location of the seller's business presence, the tax calculation can vary from state to state, city to city, county to county. Jurisdiction assignment is the precise positioning of the transaction and how it relates to all appropriate tax laws. This is calculated based on the geocoding technology that AvaTax uses to calculate all necessary sales tax fees and rolls them into a single roll-up tax rate that is neatly presented to the customer.
Just as taxes can differ based on buyer and seller locations. tax rates differ based on the goods that are being purchased. Certain items have additional government taxes attributed to them which must also be calculated at the time of sale. AvaTax uses a built-in product code which is a unique identifier assigned to each product type to calculate product tax rates. For example, soft drinks have a different code than jewelry. Based on these tax code identifies, the product's taxability rate is computed and added to the overall tax line shown to the buyer.
Continuing with our theme of various ways your items can be taxed, another possible tax can come with items that are shipped across international borders. Avalara's Cross Border functionality calculates fees associated with customs, duty tax, and import tax, adding that cost during checkout for the customer to see. This allows the tax to be collected at the point of sale and can help streamline import and export delays during the shipping process.
You may have experienced typing in your ship-to address only to be offered an almost identical address by the eCommerce site you are purchasing from. This is thanks to address validation. Address validation, usually done through APIs, allows a website to confirm the address typed by the customer is identical to the address provided by the delivery service, usually the USPS. This ensures there are no typos in house numbers or zip codes, and that apartment buildings include apartment numbers, for example. Address Validation helps increase successful delivery rates and decreases the potential for unhappy customers.
For most non-profit organizations, having to fill out a tax-exempt form requires one of two things, either the purchaser knows it by heart, based on the sheer volume of purchasing he or she does for the organization, or it sends the purchaser into a search frenzy as they scroll their inbox and desk papers looking for that elusive set of digits. Avalara CertCapture allows organizations to store tax-exempt certificate numbers directly in Magento and makes them readily available at checkout for sales tax exemption. By entering and saving the number into their account, customers can then recall the exemptions for future checkouts.
AvaTax provides you with total visibility into all transactions by producing summary and detailed reports on-demand, conveniently, and accurately. Use AvaTax Returns for fully outsourced sales tax compliance management or export your data for filing if you prefer total end-to-end automation.
Avalara VAT reduces the possibility of expensive fines, return filing, and customers being hit with unforeseen expenditures by calculating VAT in real-time at the point of sale and collecting at checkout.
For clients of AvaTax Returns, filing and paying taxes is simple. As needed by the states, paper forms are produced, mailed, and electronic forms are filed. On the correct filing date, remittance can be processed into a single payment via ACH transfer.
AvaTax is an invaluable tool to help merchants stay tax-compliant. To learn more about the benefits of integrating your Magento store with AvaTax, contact us.
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