In Ecwid it is possible to create tax setup to charge the proper rates during the checkout. This makes it easier to apply and collect correct rate, report income and comply with the local tax laws.
Automatic tax calculation
For users from the US, Canada, Australia and Europe Ecwid calculates the tax rates automatically based on the store and customer's location. On the checkout the customer will be charged a proper tax rate according to country and regional tax rules.
Tax laws are constantly changing. Country, state or even city government may apply new tax rates that a business owner is expected to keep up with. Ecwid will stay up to date on the tax law
How to setup
1. Enter your actual company address in your Ecwid Control Panel → Settings → General page. This address is needed to calculate and apply the right rate to the order on the checkout.
2. Enable automatic taxes in your Ecwid Control Panel → Settings → Taxes page:
That's all!
Once enabled, the automatic tax rate will determine a precise tax rate at checkout depending on where you and your customer are located. The tool knows the tax rules in your country, state and even county and city and applies them properly to each order:
- Whether you’re located in a region with origin-based or destination-based tax schema
- Whether shipping cost or discounts are taxable
- Whether you should charge tax in another state or country not
The tax rate is calculated with a zip code accuracy. If your customer provides zip+4, it will be calculated with even higher precision. In some states (and the number of such states is growing), the tax is calculated with a street address level precision.
Report and file taxes
Ecwid app market features the TaxJar app that will help the U.S. merchants quickly set up taxes to charge automatically the proper tax amount from customers, as well as prepare and file tax reports.
TaxJar
TaxJar app connects with the online places you sell, creates return-ready sales tax reports in each state, and will even AutoFile your sales tax returns for you to take sales tax entirely off of your plate.
1. Make sure your Ecwid store charges every customer a proper tax amount. The easiest way to do that is to enable Automatic Taxes in your Ecwid Control Panel → Settings → Taxes. Once enabled, your store will automatically calculate and charge the appropriate sales tax at checkout.
2. Install the TaxJar application from the Ecwid App Market.
3. When installed, the app will automatically start synchronizing your sales and guide you through any additional steps.
4. While it synchronizes your sales, open your TaxJar account settings and fill in your store business profile to let TaxJar automate everything for you.
5. When TaxJar finishes exporting your sales, follow the instructions they provide to generate tax reports and enable automatic filing and reminders.
If you have questions, check out TaxJar’s Help Center with useful tips and answers to common questions.
Multi-state nexus taxes
If you have a tax nexus (presence) in a state, you must collect sales tax from buyers in that state.
Ecwid considers your store address as your only nexus and when you have Automatic Taxes enabled, Ecwid will calculate tax rates accordingly. So, if you have nexus in your home state only, you’re all set. However, if you have nexus in other states, follow these instructions to make your store charge accurate sales tax in those states.
- Enable Automatic Taxes in your Ecwid Control Panel → Settings → Taxes. Once this is enabled, your store will automatically calculate and charge sales tax at checkout.
- Install the TaxJar application in the Ecwid App Market.
- Open your TaxJar dashboard.
- Navigate to the "Account → SmartCalcs API" page.
- Enable the "Use Personalized Sales Tax Calculations in your Ecwid Store" option so that Ecwid was able to use your TaxJar nexus address settings in the tax rate calculations.
- On the same page, find the "Nexus Address Configuration" section and add your store nexuses.
That's all! You now have multi-state nexus set up, and Ecwid will automatically calculate tax rates according to your nexus states.
How to handle tax exempt customers
Some customers, like wholesalers and nonprofit organisations, can be exempt from taxes. Ecwid allows to mark such buyers as non-taxable, so that they could check out in your store without taxes applied to their orders. Please refer to this article for details: How to handle tax exempt customers
Is there an extra fee to get automated tax calculations?
No, there are no extra fees. As long as you’re on one of Ecwid premium plans (Venture and above) you have unlimited automatic tax calculations free of charge.
Are county taxes calculated automatically? What about zip+4 taxes?
Yes, the automatic tax calculator recognizes counties, zip codes and even street addresses (in some states). If your customer provides zip+4, the rate will be calculated with even higher precision.
What if some of my products are not taxable?
Automatic tax rates applies for all products by default. In case you do not charge tax for some of your products, or you need multiple taxes, you will need to use manual tax setup.
Manual tax setup
How to setup
You can manually configure your Ecwid store to calculate tax rates for different regions, zones, countries.For example you need to create 7.5% tax for California.
- Go to your Ecwid control panel → Settings → Zones page. Press the "New Zone" button.
- Change the name of the created destination zone. Then click on the "Add state..." button and add the necessary state (e.g. "United States: California"). Save the changes.
- Go to the Settings → Taxes page.
- Press the "New Tax" button.
- Enter your tax name and define the other settings
- Click on the "New Rate" button. Select the zone created earlier and enter the tax rate(for example 7.5%). Save the changes.
- If you have many destination zones, repeat the steps above for each of them.
- If you want to set up the same rate for several different states, you can create a zone consisting of these states and set up tax rate for this zone.
- There is also a pre-defined zone named "Other zones" that defines tax for locations matching no zone mentioned in the rate list.
Tax isn't calculated, if I use PayPal Express Checkout
Most likely your "Zone defines by" tax option is set to "Billing address".
PayPal does not return customer's billing state code, only the country code. That is why Ecwid cannot calculate the tax, if it's based on the billing address.
Please change the "Zone defines by" option to "Shipping address", it will fix the issue.
How to add tax percentage to invoice
If you want to add tax percentage to your invoices, you can add it to the name of your tax here: Ecwid Control Panel → Settings → Taxes page.
For example, if you have 10% tax, at your invoices it may look like this: 10% Tax: $1,5
A new tax name will be applied only to orders placed after editing.
I am from EU. How can I set up my store to comply with EU business regulations?
EU countries like Germany and Italy have certain regulations that impose rules on businesses and require specific display of product prices and sales taxes. We made it possible for EU Ecwid stores to get their stores fully complied with these regulations. Please refer to this article for detailed information: EU laws: How to setup Ecwid
How to set up tax rate for certain state or city
The tax calculation algorithm determines which tax to apply by looking through the configured tax rate list, top-down. When it finds a matching zone, it stops and applies the corresponding tax rate. So you can define tax rate for particular state(s) or cities (using zip codes), then add a rate for "USA" at the bottom of the list. In this case, the USA rate will be applied to all states except the states configured explicitly.
Tax calculation in the US
In the US merchants must pay the taxes to the states where they have any connections (nexus).
For more details please refer to the special article in our Help Portal on How to set up US Sales tax in Ecwid.
