Sales taxes are defined by first setting up your tax rates. Then your product tax classes, customer tax classes and finally your sales tax rules.  A rule looks at a product, being sold to a customer then either uses the store address or, in the case of an order being shipped or delivered, the shipping address and determines which tax rates apply.

 

  1. Set up Tax Rates.  You can set up a single rate or break your tax rates down by jurisdiction.  If your monthly or quarterly sales tax filing requires you break down the amounts by state, county, city rates then you can create separate rates
    • Florida State (6%)
    • Miami-Dade County (1%)

or if you only need to report a single rate, in a single jurisdiction you can set up one rate

    • MA Sales Tax (%)

Whatever works best for your stores. Rates are defined by indicating where the sales tax rate applies. If the rate applies state or country wide then simply enter the state or country and enter a rate. If the rate is specific to a county enter the state and county. You can also specify, city and zip codes. Zip codes allow for ranges, wild cards and individual 9 digit zip or postal codes.

    • 029*
    • 61550-61561
    • 91554

 

  1. Set up product tax classes. Generally you will have 2 or 3 of these at the most. For US customers General Merchandise, Shoes & Clothing, Food, Non-Taxable Items are sufficient tax classes. If you only sell taxable merchandise you can make a single taxable merchandise class. For VAT countries it often comes down to defining full rate, reduced rate and zero rate vat items.
  2. Set up customer tax classes. Most retailers only need to define taxable customers and non-taxable customers. Note that for each non-taxable customer you also have to set the tax-exempt tax flag in their customer record.
  3. Set up tax rules. Start by setting up a rule called “<your state> Sales Tax (#%)” add your state and rate to the name. e.g.
    • FL Sales Tax (7%)

Add your taxable customer, your taxable products (usually general merchandise and shoes & clothing), your taxable customers and your tax rates.



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