Have you ever purchased something online from an e-commerce website? Perhaps school books through Amazon.com, clothes through e-Bay, or a small shop across the country selling homemade jam? The internet has made shopping online quite convenient, but have you ever wondered how taxes are calculated when making an online purchase?

• Automatic Sales Tax Calculator For Your Online Store Free
• Automatic Sales Tax Calculator For Your Online Store Near Me
• Automatic Sales Tax Calculator For Your Online Store Purchases
• Automatic Sales Tax Calculator For Your Online Store Online

How To Calculate Sales Tax

• The jurisdiction breakdown shows the different sales tax rates making up the combined rate. While most taxable products are subject to the combined sales tax rate, some items are taxed differently at state and local levels. Be sure to apply the correct sales tax rate to your sale.
• Automatic sales tax calculation When you add sales tax to an invoice in QuickBooks, the calculations are automatically taken care of. We calculate the sales tax rate based on date, location, type of product or service, and customer.

There are two ways that e-commerce retailers collect taxes from online orders.

E-commerce retailers either charge the buyer’s local tax rate, or establish a “NEXUS” rate, which means that the retailer has registered as conducting business from a particular state or county because they:

• Have a physical location in the state
• There are resident employees working in the state
• The business has property (including intangible property) in the state
• If there are employees who regularly solicit business in the state

Stay on top of sales tax. Perhaps the most stressful part of filing taxes as a seller on Amazon is the sales tax, particularly if you’re an FBA (Fulfillment by Amazon) seller who uses Amazon’s fulfillment centers in different states. What is the sales tax, exactly? A sales tax is a tax on items for sale that are deemed non-essential.

Let’s say your business is registered in Los Angeles, and the NEXUS is 8.75%. So, in that case, you can charge your (seller’s) local tax rate even though you are selling to San Francisco. The state only requires that you collect state tax rate (which is 7.75%), so at 8.75% you fulfilled state tax requirements.

Why Taxes Are Collected

The Marketplace Fairness Act was also introduced on February 14, 2013 and is currently pending in the United States Congress that would enable state governments to collect taxes from remote retailers with no physical presence in their state.

According to the marketplace fairness act website, the legislation should help businesses since it, in theory, will level the playing field for all businesses, from brick and mortar to e-commerce websites by eliminating the 5-10% price advantage for non-tax collecting businesses.

A website like Amazon saw this as a competitive advantage and fought to protect its customers from the sales tax. Unfortunately for them, Amazon will now collect sales tax from customers in 24 states as of early 2015.

That’s a little bit about how e-commerce websites calculate sales tax for online orders and why they are required to do so but it can all get a bit confusing, so be sure to consult with The California Board of Equalization!

Automatic Sales Tax Calculator For Your Online Store Free

Better to be safe than sorry! If you have any questions about getting your e-commerce website up and running with Magento, contact us today!

Complete Sales Tax Calculator Solution with WooCommerce

Updated: October 28, 2020

Every day, people start their online businesses by selling products or services to customers or businesses. They pick a domain name and hosting plan, build their website and eCommerce solution, and begin their sales and marketing. If you picked WordPress as your website’s CMS, you have made a great choice in my opinion. WordPress continues to be the most popular CMS on the internet today. WooCommerce is the most popular eCommerce framework (and the second-fastest growing CMS).

There are several eCommerce solutions available for integration with WordPress and each has its pros and cons. WooCommerce is the “official” eCommerce solution for WordPress for good reason. Although advanced features (such as shipping calculations) can be added with premium extensions, the basic framework is free. It is the most customizable eCommerce solution on the Internet. If you write PHP, it’s even more customizable. Automattic, the company that builds WordPress, acquired WooCommerce in 2015.

One of the biggest headaches facing new business owners getting started was “sales tax.” I still brush up on this topic to make sure that my business is compliant with ever-changing tax laws. Usually, it is a client that has questions that draws me back to this topic.

Question 1: “Do I owe sales tax to municipalities I sell to?”

I can’t answer this question for you. Sales taxes are set at the state and municipal levels. For example, if you live in an unincorporated area in Georgia, the sales tax rate is 4%. However, if you live in a larger metro area such as Atlanta (where my business is currently based), the sales tax rate is 8.9%. If you sell services online, the chances are good that you do not have to collect sales tax. If you sell products online, the chances improve that you may owe sales tax in the municipalities where your customers live. Not collecting sales tax when you’re required will come straight out of your profits.

However, a lot of business owners don’t know that they may have to collect sales tax for the community where your product is purchased or shipped to.

Here is some reference material that may help you figure out the sales tax collection dilemma for your online business:

1. The U.S. Supreme Court Ruling on South Dakota vs. Wayfair
2. Remote Sales Tax Collection from the National Conference of State Legislatures

I am neither an accountant nor do I play one on TV. Check with your tax professional to determine where you need to collect sales tax. Now, on to the good stuff.

How to add Sales Tax Calculations to Your WooCommerce Store

A couple of prerequisites come first before following the steps you need to take before adding sales tax calculations to your WooCommerce store.

1. A self-hosted WordPress website
2. A WordPress.com/WooCommerce account
3. A WooCommerce store installed
4. You have products (or services) in your WooCommerce store

Step One: Login to your WordPress.com account

Several of my clients lately have installed WooCommerce into their websites from their WordPress dashboards. A lot of the “goodies” and features that make their WordPress websites even more awesome are located in their WordPress.com account. The WordPress CMS itself is free and open-source but the company that built WordPress adds more free features into WordPress.com. A WordPress.com account is required to integrate the features located below. Although you have a self-hosted WordPress site, WordPRess.com provides several API integrations that can help your site run smoother and faster.

Step Two: Install JetPack

Automatic Sales Tax Calculator For Your Online Store Near Me

I highly recommend using JetPack. I installed JetPack in my first WordPress site and I still use it today. It is a very versatile plugin and it is only getting better. The free version of JetPack has a ton of functionality like site stats, preventing brute force attacks, and adding automated sales tax to your WooCommerce store. Several premium feature levels offer additional benefits such as automatic spam filtering, malware scanning, and security fixes.

Click here to find out more about which JetPack version is right for you.

Step Three: Install WooCommerce Services

Note: This plugin used to be called WooCommerce Services and the files are still called woocommerce-services.

Automatic Sales Tax Calculator For Your Online Store Purchases

WooCommerce Shipping and Tax is the free extension from WooCommerce that helps generate the sales tax. How exactly do these plugins work together? As a coder, I have to say “I don’t know.” For me to know I would have to work closely with the team at Automattic. What I do know is that they do work.

Step Four: Set your WooCommerce Tax Settings

You also have to set up your Tax Settings in WooCommerce. Here is how to do that:

1. Log in to your site’s WordPress Dashboard
2. On the left-hand side hover over “WooCommerce” and click “Settings.”
3. After you have installed the plugins above you will see the “Tax” settings as the third tab from the left.
4. Answer the questions as pertinent to your product or service.

Step Five: Integrate MaxMind

This is a new step as of October 28, 2020. If in your WooCommerce settings you selected “Geolocate” for your “Default Customer Location,” you will need to integrate MaxMind. The MaxMind GeoLitedatabase will be periodically downloaded to your wp-content folder for you.

To integrate MaxMind follow these steps:

1. Go to WooCommerce >Settings >Integration from the navigation menu on the left
2. Directly under the MaxMind License Key field is a link to the MaxMind Geolocation Integration documentation. Click on it.
3. Then scroll down to Create an Account on MaxMind.
4. Create a MaxMind Geolocation account.
5. Copy and paste your license key into the MaxMind License Key Field.
6. You’re all set (on this step)!

Step Six: Make your Taxable Products Taxable

Automatic Sales Tax Calculator For Your Online Store Online

To make your WooCommerce store calculate tax, you have to have your products set to “Taxable.” Here is how to make your WooCommerce products taxable:

1. Stay logged in.
2. On the left-hand site hover your mouse over “Products” and click on “All Products.”
3. Click on a Product.
4. Scroll down to the Product Settings for that Product and on the third line down make sure the drop-down is selected to “Taxable” if it is a taxable product.
5. Click “Update.”
6. Test your product in the checkout and cart to make sure it is calculating sales tax.

Still Have Questions?

If all of this seems like a huge pain, I agree, it can be. However, getting it right could mean a lot of money. If you have further questions, contact me from the simple form below and I will happy to help with making your WooCommerce store calculate sales tax.