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Manual Tax Setup

Part of running a business is calculating and collecting sales tax. In BigCommerce you can set taxes up manually by defining tax rates for areas you are required to collect sales tax. The sales tax will be applied at checkout based on the shopper's billing or shipping address.  For stores based outside the United States, this is where taxes need to be set according to local tax requirements.

Merchants based in the U.S. have the option to set up automated tax with our free Avalara AvaTax integration.

 

Need help with taxes? The instructions in this article assume you already know the tax requirements necessary for running your business online. We highly recommend contacting your accountant or local tax authority to ensure you are charging tax properly for your store. Note that our support team is not qualified to give tax advice.

 
 

Tax Classes: What's getting taxed?

Tax Classes refer to the types of product or fees that you need to charge tax on. For example, depending on your local tax laws, you may need to charge different tax rates for shipping, gift wrapping, clothing, food, or non-taxable products. Custom tax classes can be applied to each product so that the correct rate is charged at checkout.

Go to Store SetupTax, then click the Tax Classes tab. From here, you can add, remove, or rename your tax classes.

Tax Classes

 
 

Tax Zones: Where are you charging taxes?

The regulations for taxes vary based on your geographic location. For example, in the United States, your tax obligations are based on whether you have nexus (a connection to the city or state) and if the product is taxable according to state laws.

BigCommerce allows you to charge different rates for different geographic locations through the use of Tax Zones. A tax zone specifies geographical areas where the tax rates apply. You can set whether this zone applies to a billing, shipping or your store’s address.

Tax zones can be defined by country, state/province or zip/post codes. There is no limit to the number of tax zones you can create on your store, but a geographical area can only be defined once. See the examples further down this article for more details.

Tax Zones

From Store SetupTax, click the Tax Rates and Zones tab. From here you can add, delete, or edit your tax zones.

  • Tax Zone name — sets the name of this tax zone. We recommend naming it after the geographic region it represents (e.g. Los Angeles, Denton County, California, USA).
  • Zone type — select whether the zone represents a country, state, or collection of zip/post codes. Zip/post codes can be used together in a zone for city or county taxes.
  • Tax Zone Applies to — if you want to limit this tax rate to certain Customer Groups, select Only customers in this group, and select the group. Otherwise, keep this setting to All Customers in my Store.

Setting up county zip codes

 
 

Tax Rates: How much are you charging?

Once a Tax Zone is created, you can add rates to it. Tax rates are the percentages at which products or services are taxed. You may charge multiple tax rates within a zone. For example, if you have a city zone, you may need to set up a set of city-based tax rates in addition to a set of state-based tax rates (see screenshot below).

Tax Rates

After you have created a tax zone, click the Tax Rates tab to add, delete, or edit tax rates. You can also select Edit rates next to a particular zone in the list of tax zones.

You will enter a tax rate for each tax class. If you do not need to charge tax for a particular tax class, you can leave it at 0.

  • Tax Rate Name — name the tax rate something that represents which tax you are charging, e.g. “City tax” or “Federal tax”.
  • Priority — if the zone has more than one rate, enter the priority.

Tax Calculation Priority

Tax Calculation Priority

In some circumstances, you will need to apply multiple rates to a single tax zone. For example, you may need to charge both city and state, or both provincial and federal sales taxes.If you have a tax zone that has more than one rate, you need to set the Calculation priority to determine whether to apply each rate to the subtotal or a taxed total. The lowest number has the highest priority.

 
 

Configuring Tax Options

You can find the general tax options on the Configure Tax Options page under Store SetupTax.

Configure Tax Options

Tax Label

A general name that describes the type of tax applied to orders on your store. This will be shown throughout your store when prices are set to be shown including and excluding tax, or when taxes on orders are shown as one summarized line item. Some suggested values include: Tax, Sales Tax, or GST.

Tax Label Storefront

Prices Entered With Tax

Choosing to enter prices inclusive or exclusive of sales tax will affect the price of products on your store.

  • Inclusive of tax — the tax is already included on the product price. What you see is what you pay.
  • Exclusive of tax — the product price is prior to sales tax. This is the way sales tax applies in a majority of United States based stores.

Calculate Tax Based on

This setting controls which address should be used to determine the tax zone that a customer falls under. Most businesses charge tax based on the Shipping Address of their customer. Select Billing Address to charge tax based on the customer's billing address, or Store Address if tax should be determined by your store's address.

 

Be careful! If your store address is in a zone with a tax rate applied to it, then calculating tax based on your store address will charge tax on all orders.

Shipping Tax Class

Select the tax class (configured using the Tax Classes tab) that should be used to calculate tax for shipping costs. Using a different tax class will allow you to tax shipping costs at a different rate, or not at all.

Gift Wrapping Tax Class

Select the tax class (configured using the Tax Classes tab) that should be used to calculate tax for gift wrapping applied to products. Charging gift wrapping using a different tax class will allow you to tax gift wrapping at a higher rate, or not at all.

 
 

Configure Tax Display Settings

Tax Display settings

Show Prices on Product Listings — how product prices should be shown on listings such as the list of products in a particular category, brand or set of search results. Select Including tax to show product prices on these listing pages inclusive of any tax charges. Select Excluding tax to show prices excluding tax. Choosing Including and excluding tax will show both the inclusive and exclusive tax price for each product, using the Tax Label configured above.

Show Prices on Product Page — How product prices should be shown on the product page when viewing a single product. Select Including tax to show the product price inclusive of any tax charges. Select Excluding tax to show the product price excluding tax. Choosing Including and excluding tax will show both the inclusive and exclusive tax price for the product, using the Tax Label configured above.

Show Prices in Shopping Carts — How pricing should be shown on the View Cart page. Select Including tax to show all prices on the View Cart page inclusive of any tax charges, and tax as included in the grand total. Select Excluding tax to show all prices excluding tax.

Show Tax Charges in Cart — How the list of applied taxes on a customer's cart should be shown on the View Cart page. Select As one summarized line item to show a single combined tax total in the cart with the Tax Label specified above, or Broken down by tax rate to show a detailed tax summary of each tax rate and the amount that applies to the cart.

Show Prices on Orders & Invoices — How pricing should be shown on orders and invoices. Select Including tax to show all prices inclusive of any tax charges, and as tax included in the grand total. Select Excluding tax to show all prices excluding tax.

Show Tax Charges on Orders — How the list of applied taxes on an order should be shown on invoices and in your control panel. Select As one summarized line item to show a single combined tax total on an order with the Tax Label specified above, or Broken down by tax rate to show a detailed tax summary of each tax rate and the amount that applied to an order.

 
 

Configuring Default Tax Address

Configure Default Tax Address settings

This is the address that will be used to determine the tax zone to be used for all tax calculations throughout your store until a customer checks out or estimates applied taxes on the View Cart page.

If the majority of your customers are from a specific location, this address will allow you to show your store's prices inclusive of all taxes that apply to that location. When the customer makes a purchase, applied taxes will then be calculated using their personal address, rather than this default address.

If you've selected Yes, I will enter prices inclusive of tax above, then it will be assumed that product prices entered include the tax component that this default address falls under.

 
 

Example | Creating a Zone based on a State/Province with a Single Tax Rate

First, we'll create a zone based on a state with a single tax rate. In our example, we're using Texas.

1. In the tax settings area, click on the Tax Rates & Zones tab and click the Add a Tax Zone button.

Add a Tax Zone button

2. Name the zone "Texas", then choose the radio button next to This tax zone is based on one or more states/provinces.

3. Select United States in the Countries box, then select Texas in the States box.

4. Save your changes. You'll be forwarded to the Tax Rates tab. Then, click the Add a Tax Rate button.

Add a Tax Rate button

5. Name the tax rate, then type in the percentages for the appropriate tax classes. In this case, we want to charge tax only on products (not gift wrapping or shipping), so we'll only put the 8.25 in that box, and put 0 for the rest.

6. Save your changes. Your Texas zone is set up successfully. Click the rebuild your product prices link to finish setting up your zone and rate.

Rebuild prices link

 
 

Example | Create a Zone based on a State/Province with Multiple Tax Rates

In our next example, we'll create a zone based on a province with multiple tax rates. In our example, we're using Quebec, which has both a federal and provincial tax.

1. In the tax settings area, click on the Tax Rates & Zones tab. Click the Add a Tax Zone button.

2. Name the zone "Quebec", then choose the radio button next to This tax zone is based on one or more states/provinces.

3. Save your changes. You'll be forwarded to the Tax Rates tab. Click the Tax Rates tab, then click the Add a Tax Rate button.

4. Give the tax an appropriate name. In our example, we're naming the federal tax rate "GST" (Goods and Services Tax). We only want to tax products, so only Default Tax Class will have a number other than 0.

Calculation Priority

5. We will leave the Calculation Priority at 0, since we want this rate calculated first. Save your changes. 

6. Now we'll add the provincial tax rate. Click the Add a Tax Rate button.

7. Name the tax appropriately, then enter the percentages for the rates. In our example, we're naming the provincial tax rate "QST" (Quebec Sales Tax).

Calculation Priority set to 1

8. Change the Calculation Priority to 1, so it is calculated after the federal tax (GST). Save your changes. Your Quebec zone is set up successfully.

Click the rebuild your product prices link to finish setting up your zone and rate.

 
 

Example | Creating a Zone based on Zip/Postal Codes

Finally, we'll create a zone based on zip codes with a single tax rate. In our example, we're using Florida, which has different tax rates based on your location within the state. Even though we are only creating a single 7.75% zone here, in practice you'll want to create a zone for each different rate.

1. In the tax settings area, click on the Tax Rates & Zones tab. Click the Add a Tax Zone button.

3. Name the zone, in this example it is named "Florida 7.75%". Then choose the radio button next to This tax zone is based on one or more postal or ZIP codes.

4. Choose United States from the Country dropdown menu, then type in the zip codes that apply to your specified tax rate. Type each zip code on a new line.

Using Wild Cards

The Zip/Postal Codes field supports use of the wildcards * and ?.

Using an asterisk, *, will capture all numbers from its position in the zip code all the way to the right. For example, entering 335* will capture all postal codes ranging from 33500 through 33599.

Using a question mark, ?, will capture numbers 0-9 only in the position that the question mark is placed. For example, entering 335?1 will capture 33501 through 33591.

Tax Zone Settings

5. Save your changes.

6. Now, click the Add a Tax Rate button. Name the tax rate, then enter the percentages for each of the tax class rates.

Florida Tax Rate Settings

8. Save your changes. Your 7.75% Florida zone is set up successfully. Repeat this process to set up your other zones.

Click the rebuild your product prices link to finish setting up your zone and rate.

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