Manual Tax Setup
Part of running a business is calculating and collecting sales tax. In BigCommerce, you can set up taxes 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. (If you're based in the US, we recommend using an automatic tax provider).
To set up taxes manually, go to Store Setup › Tax, and ensure that Manual tax is enabled.
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.
Manual Tax Setup: Overview
You will need to set up your tax rate based on the location you're charging (tax zone) and what specifically you're charging tax on (tax class).
For example, let's say you need to charge 5% on perishable goods and 8% on non-perishable goods for Colorado. In this case, your tax classes should include Perishable and Non-Perishable, your tax zone is Colorado, and your rates within the Colorado zone are 5% (for the perishable tax class) and 8% (for the non-perishable tax class).
Before you start setting up manual taxes, you will need to determine the following:
- What do you need to charge tax on (e.g. Product types, shipping, gift wrapping)? This determines your tax classes.
- Where do you need to charge taxes (e.g. countries, states, cities, counties)? This determines your tax zones.
- Who do you need to charge (are there tax-exempt customers?)? This determines if you need to exempt a customer group.
- What rates do you need to charge? This determines the tax rates, which are assigned by zone and tax class.
Tax Classes: What's getting taxed?
Tax classes are classifications for products and other line items that may need different tax rates charged. For example, your state may require you to tax perishable goods and non-perishable goods at different rates, or you may be required to tax shipping or gift wrapping. This is achieved by creating different tax classes for each group, and assigning different tax rates for each tax class within a zone. The tax classes you create apply universally to all of your zones, so you can set them to a rate of 0% if it's not required for a particular area.
To view, add, or edit tax classes, click Edit next to Manual Tax.
We've included some tax classes automatically. By default, there is only a single Default tax class for products, which all products are assigned to.
If you are selling products that require different tax rates, such as perishable and non-perishable, you can create those tax classes here. Assign your products to the appropriate tax class by editing the product and selecting the new tax class from the drop-down. If you have several products, we recommend updating them in bulk.
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/postcodes. 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. For example, if you create an "Austin" zone and a "Texas" zone, customers in the "Austin" group will only be charged the rates you set for that zone, not for the rates you've set up in the Texas zone. You therefore need to make sure the statewide rates are also represented within the city zone (more details on this in Tax Rates).
To add, delete, or edit a tax zone, go to Store Setup › Tax and click Edit next to Manual Tax. Then click the Tax Rates & Zones tab.
- Tax Zone Name — sets the name of this tax zone. We recommend naming it after the geographic region it represents. For example, Los Angeles, Denton County, California, or the USA).
- Tax Zone Type — select whether the zone represents a country, state, or collection of zip/postcodes. Zip/postcodes 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 these groups, and select the group. Otherwise, keep this setting to All customers in my store.
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).
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.
When adding or editing a rate, you will need to specify a name and enter a rate for each tax class. If you do not need to charge tax for a particular tax class, enter 0 for the rate. Name the tax rate something that represents which tax you are charging, like City Tax or Federal Tax.
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.
Tax rates in a zone that share the same priority will be added together. Tax rates in a zone that have different priorities will be compounded in order of the priority, where the lowest number has the highest priority. So for example, if you had to charge a GST rate on top of a PST rate, you would give PST a priority of 0 and GST a priority of 1.
Below we've included a few examples of how to set up zones, classes, and rates for everyday situations.
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.
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 the 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. Click the 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.
State/Province with Multiple Tax Rates
In our next example, we'll create a zone based on a province with multiple tax rates. In this 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.
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).
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.
Zone-based on Zip/Postal Codes
Finally, we'll create a zone based on zip codes with a single tax rate. In this 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.
2. 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.
3. Choose the United States from the Country drop-down menu, then type in the zip codes that apply to your specified tax rate. Type each zip code on a new line.
4. Save your changes.
5. Now, click the Add a Tax Rate button. Name the tax rate, then enter the percentages for each of the tax class rates.
6. Save your changes. Your 7.75% Florida zone is set up successfully. Don't forget to click the rebuild your product prices link to finish setting up your zone and rate. Repeat this process to set up your other zones.
The Zip/Postal Codes field supports the 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.
To capture all variations of a specific zip code, enter the base code on one line, then the base code with an asterisk on the next line, like so: