Configure Taxes

This guide will help you customize your tax settings. When you’re finished configuring and testing, you will be able to charge tax.

Summary

Feature: Taxes
You Need: An understanding of your business’ taxable regions; your business address.
Code: No
Difficulty: ◉◎◎◎◎

Configure Taxes

Configure the tax settings.

1. Determine which Tax Method to use

Only 1 method can be used at a time.

Method	Reasons to use
Advanced Billing Managed Sales Tax	Most common. No code, quick launch. Taxes down to a specific jurisdiction (such as the state+county level). Powered by Advanced Billing's Integration to Avalara.
Custom Taxes	For simple sales tax. Taxes down to the state/region level.
Avalara Managed Sales Tax `Requires Avalara Account`	For companies who want to connect their own Avalara Account.

2. Configure Basic Tax Rules

Go to Config > Taxes.

Tax Origin Address Help
Most of time this will be your business address.
Tax Destination Address
You will need to determine whether you are using the shipping address or billing address. Depending on which you choose, double check that you are requiring this information for a new user signup.

3. Set up Advanced Billing Managed Sales Tax optional

Go to Config > Taxes.

Enable Advanced Billing Managed Sales Tax Help
Click the "Enable Advanced Billing Taxes" if it has not been enabled already. You will need to confirm your Tax Origin Address.
Set up Taxable Regions (Jurisdictions) Help
Select all of the regions you are planning are collecting taxes in by selecting the “edit” button next to it. If you do not see the country listed, check the “Other” section.

4. Set up Custom Taxes optional

Go to Config > Taxes. If you have completed step 3, skip this step.

Enable Custom Taxes
Click the "Enable Advanced Billing Taxes" if it has not been enabled already. You will need to confirm your Tax Origin Address.
Create a New Tax Help
Select the “Create New Tax” Button. You will need to name your custom tax, as well as select whether or not it is a general tax or EU VAT tax.
Set up Tax Rules Help
Within the new tax, you will need to specify what country and what state/province you are wanting to tax. You will also need to provide the percentage of tax for each. You can add other regions to the Custom Tax by selecting the “+Add another Tax Rule” option. To finish select “Create Tax”.

5. Set up Avalara Managed Taxes optional

This can only be done if you have your own Avalara account. Go to Config > Taxes. If you have completed step 3 or 4, skip this step.

Link your Avalara Account Help
Select the “Get Started” button on under the “Link My Avalara Account”. You will need your Avalara Account ID and License Key. You will also need to select which company to use as well as if you want to post documents to Avalara.
Configure Avalara
Please see Advanced Billing's detailed documentation here for all of the details.

6. Test

Create real subscriptions that match your use case. Use a real shipping or billing address that should be taxed. Look at the invoice that is created. If you see discrepancies (most commonly, taxes not being applied), modify your tax settings accordingly.

Check these things, in order:

1. Check your Tax Configuration
- Is the Tax Origin address correct?
- Have the Taxable Regions been setup (specifically, the one from your failed test?)

2. Check your Catalog
- Is the product or component(s) that is not being taxed, set to taxable?
- Is the product or component(s) that is not being taxed, set the to the correct tax code or tax option?

3. Check the Subscription's Payment Profile (if taxing on billing address)
- Is the full billing address on the payment profile valid? (2 letter state/country code, address state/country/zip are valid)

4. Check the Customer Record (if taxing on shipping address)
- Is the full shipping address valid? (2 letter state/country code, address state/country/zip are valid)
- Is the customer set to "tax-exempt"?