Tax Settings

Online retailers are responsible for collecting sales tax on goods sold to customers in states where you have “nexus”. In the tax world “nexus” means, “a connection to the state”. Additionally, the product you are selling must be taxable in that state.

Sales Tax is a state regulated tax. It’s not federally collected, so you may find yourself dealing with sales tax in different states. Fortunately, if you do need to collect sales tax, BigCommerce and Avalara have made it incredibly easy for you to set up.

 

Be careful! We highly recommend contacting your local authority on tax to ensure you are calculating tax properly for your online store.

Sales Tax Calculation

If you're in the United States, and don't have any special tax needs (e.g. excise taxes, tax-exempt customer groups), you can configure tax automatically. If you do have special tax needs, or operate outside the US, follow the steps below to set up taxes manually.

1. Go to Store SetupTax.

2. Next to Tax Calculation, click Manual.

Manual sales tax calculation button

3. Set up your tax classes, zones, and rates.

4. Configure your tax options.

5. Configure your tax display settings.

6. Configure your default tax address.

7. Save your changes.

Configure Tax Options

Tax Label

Tax Label field

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.

Prices Entered With Tax

Prices Entered With Tax setting

Select Yes, I will enter prices inclusive of tax if you will be entering your product prices with the tax already applied. Select No, I will enter prices exclusive of tax if the product prices you will be entering do not already include tax.

Calculate Tax Based on

Calculate Tax Based On setting

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

Shipping Tax Class

Shipping Tax Class setting

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

Gift Wrapping Tax Class setting

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

Show Prices on Product Listings

Show Prices on Product Listings setting

This setting controls 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

Show Prices on Product Page setting

This setting controls 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

Show Prices in Shopping Carts  setting

This setting controls 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

Show Tax Charges in Cart setting

This setting controls 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

Show Prices on Orders & Invoices setting

This setting controls how pricing should be shown on orders placed by customers, and their associated 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

Show Tax Charges on Orders setting

This setting controls how the list of applied taxes on an order should be shown to customers on invoices, and in your store's 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.

Configure 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.

Additional Resources

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