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Setting up US taxes

Warning!

While the ShopWired platform is set up to automatically calculate sales tax for you, it does so based on the way that you have configured your sales tax settings. If you have not configured your settings correctly, or at all, then you might not be charging your customers correctly, which could lead to financial ramifications for your business. If you have questions relating to the functionality of the settings, please contact us. If you are unsure what your tax liabilities are, then please contact a tax professional prior to adjusting your settings.

• Things to consider before setting up US sales tax
• Adding a nexus
• Sales tax ID
• Assigning tax codes to products
• Calculating sales tax on admin orders


Things to consider before setting up US sales tax

When you should be charging sales tax

You will need to charge sales tax to customers who reside in any state where you have a physical or economic nexus and you sell taxable products. Read through our US sales tax guide for more information about what nexus is. If you don’t have nexus in a state, then you do not need to charge sales tax to your customers who enter an address within that state.


When you need a sales tax ID and how to obtain one

If you have nexus with a state and therefore need to charge sales tax within that state, then you will need to register for a sales tax ID with that state. This needs to be done for every state that you have a nexus with. How you can obtain a sales tax ID will differ depending on the state. Information about this for each state can be found in our 'Sales tax information by state' guide.


Adding a nexus

In order for the platform to accurately charge sales tax to customers who reside in states where you are registered to collect sales tax, you will need to add the states in which you have nexus in your taxes settings. To add states select Settings > Taxes from the menu.

Please note!

Delaware, Montana, New Hampshire and Oregon are not available to add as a nexus as sales tax is not charged at either the state or local level in these states. While Alaska does not charge a state sales tax, it does allow local governments to collect sales taxes, and is therefore a selectable option.

In the 'Tax Nexus' section select add a new nexus:

In the pop-up that appears select whether your nexus is physical or economic.


Physical

If you select ‘physical’, enter the name you would like to give the nexus and then supply the address at which you are located, choosing the state from the drop-down box:

Then select add nexus.

If the address you entered could not be verified with USPS, you will see a warning message:

You should then check your address and fix any mistakes you might have made. Alternatively, you can select add nexus again to continue without validating the address, but we highly recommend trying to revalidate.

If you have a physical location for your business, and therefore have a physical nexus, you must add the address of the location. This is especially important for origin-based states (Arizona, California, Illinois, Mississippi, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Texas, Utah, and Virginia) as the address is used to determine what sales tax is applicable to orders in those states. Failure to add an address (or adding an incomplete or incorrect address) will result in sales tax not being charged correctly in these locations, which could have consequences for your business with the relevant tax authority.

You can change your physical location or what type of nexus you have at any point.


Economic

If you select ‘economic’, simply choose the state from the drop-down list and select add nexus:


Once you’ve created a nexus, you can edit it or delete it at any time.

Once you have added your nexus with a state in your account, the ShopWired platform will automatically begin to charge sales tax for customers who input an address from that state when checking out on your website. The platform is configured with default rates for the state, county, city and district levels and will automatically configure the rates based upon whether or not the state is a destination or origin state.


Sales tax ID

When you add a nexus the state will then appear in the ‘Tax Locations’ section:

For each state in which you have created a nexus, you should apply for a sales tax ID with the relevant authority. Once you have the sales tax ID, you can input it for the state in this section.

If you don’t yet have an ID, you can always add it later.


Assigning tax codes to products

In some states some products attract a different tax rate than the default. For example, in Pennsylvania most clothing items do not attract any sales tax. For many types of products you can assign a tax code to them and the system will then know where tax should be appropriately charged.

To assign a tax code to a product use the 'Product Pricing' section of the product creator/editor. Under 'Tax Code' select the appropriate tax code category for your product:

Notes about assigning tax codes to products

• These tax codes are supplied by TaxJar and cannot be changed or added to by us. If you don’t find an appropriate category for your products and would like it to be added, then you should contact TaxJar directly by emailing support@taxjar.com.

• It is your responsibility to ensure that you are using these tax codes correctly. The ShopWired support team cannot tell you if a tax code can be applied and, if so, which tax code you should apply to your products. If you have any questions about if you should use these tax codes, you should consult a tax professional.

• If you find that assigning one of TaxJar’s tax codes to your products doesn’t work for your business’s needs, then you might want to try creating a custom tax rate for them instead.


Calculating sales tax on admin orders

To calculate sales tax on admin orders which are placed for states in which you have nexus, you will need to select calculate sales tax in the 'Details and Confirmation' section of the create order page:

Sales tax will then be automatically calculated and added to the order total.