Tackle Online Sales Tax using Taxjar

Online sales tax can be a maze.

Here is my list, after reading which, and with help from this amazing service called Taxjar, I hope a Store owner would be better armed to tackle this beast.

  1. Finding the Nexus where to collect taxes. Its better to consult the attorneys to be sure but can get a fair start and know how here

  2. Major components contributing to Sales Tax calculations:

    1. Nexus State is Origin or Destination Based
      1. E.g. Texas is Origin Based and California is Destination Based Nexus
    2. Nexus State charges tax on shipping or not
      1. E.g. Texas charges tax on shipping but not California
    3. Special Exemptions by state on certain product categories 1
    4. Sales Tax components by city, county, districts and different rules for same product
      1. Visit Taxjar Api Demo to see in action
  3. How does Taxjar take care of this complexity and help collect accurate taxes in their SmartCalc Apis

    1. SmartCalcs Api is a fancy name to the Taxjar Apis used for calculating sales tax and other supported apis as they Calculate sales tax Smartly
    2. Get the Api Token
    3. Add Nexus Addresses 2
    4. From the Nexus information, it automatically derives
      1. whether origin/destination based rules are applicable,
      2. whether shipping is taxable in nexus state or not
    5. To help with special tax calculations for different product categories, it needs more information in form of product tax codes
      1. Supported product tax categories are available through api and can be easily imported
      2. Product Tax categories need to be sent as part of line_item info
      3. Your development team can better decide whether to store tax codes in tax categories assigned to products or directly assigned to products or some other way as appropriate
    6. Taxjar also enables sending discount in line_items and handle the maths for you, for e.g. given a line_item having 2 quantity with unit_price 10 and discount of 5 correctly calculates taxable amount as 15 ((2 * 10) – 5)
  4. Taxjar helps with Sales Tax Reporting and keeps you guarded by providing Detailed Sales Tax Analyis

    1. It helps you compare the actual and expected sales tax collected and alerts of any discrepancy well in advance
  5. Taxjar further helps you with support for auto filing of collected tax

  6. Last but not the least, Taxjar helps you with multi-vendor marketplace scenario and has an api to take care of it as well.

Armed with the knowledge of the basics and with a the help of Taxjar, you can focus more on running the business and selling more without having to spend a lot of time on sales tax compliance

  1. Accurate and correct Nexus Information

    add_nexus

  2. Detailed Analysis Report showing us the discrepancy between actual and expected sales tax

    detailed_analysis

  3. Comparision of Orders vs Api requests affecting the Taxjar pricing

    1. Best Case scenario is 2 requests per order (1 for showing tax and another for recording order on taxjar)

    api_requests_and_billing

We, at Vinsol, believe in partnering with our clients to offer them the most business friendly e-commerce solutions

And so we are in the process of upgrading our spreecommerce taxjar extension to cover most of the TaxJar integration functionality out-of-the-box. Stay tuned to learn more about how this open source extension can make the life of business owners a little easier.

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