Tags: US tax Jurisdiction State tax
Configuring tax rates in Xero bridge app for stores based in USA
For most stores, there are only two types of tax rates that are collected. One is the normal tax rate for sales based on their jurisdiction. The other one is for exempt or zero rated products where no tax is collected.
- Xero Sales Tax Code
This is the tax code for normal products (non-zero rated). This will be based on the Country/Province/State that the business is registered in.
- Xero Zero Tax Code
This is the tax code name for the products or orders that do not have any taxes applied to them. This field usually is Zero rated field or Exempt field.
For customers based in the USA, our app has an option for the US taxes where you can configure the tax rates State wise or Jurisdiction wise.
To implement this, you can navigate to our app in Shopify and click on Settings >> Tax settings.
A. If you are receiving the flat tax for the states then follow the below steps.
1. You can select the States option from the drop down list against "Maintain your tax based on".
2. Select the state name and configure the tax rates against tax codes from the drop down list.
3. To configure the tax for more states, click on "+Add" button.
4. Once the taxes are configured, Save the tax settings.
When there is a tax applied to an order in Shopify, our app will select the correct tax code based on the settings that you have done in our app and sync to Xero.
B. If you are receiving the tax for the city, state, and county then follow the below steps.
1. You can select the Jurisdiction option from the drop down list against "Maintain your tax based on".
2. When the first order from any jurisdiction is received in Shopify, then our app will auto detect the Shopify side of Jurisdiction automatically and display it in the tax setting. This first order will stay unsynced.
3. After the first order is received for any jurisdiction, you need to go to our App's Dashboard >> US Tax Settings and save the settings by selecting the respective tax code against tax rate because there may be same tax rates for many jurisdictions. To get the Xero Sales TaxCode under the drop down list, it needs to be created in Xero first then only it will be available to select.
4. Navigate to our app's Dashboard >> Order List >> Unsynced orders page and resync that order.
5. If another order comes from the same jurisdiction next time then our app will identify the jurisdiction from the saved US tax settings and it will sync that order automatically.
C. Tax as a line item
We can also sync tax as a line item if you do not want to deal with all the tax rates separately. The reason for this is that Xero does not allow automatic tax rate when the orders are entered through any app. We would need a Liability account to be associated with the Tax Liability so that we can set the option to sync tax as a line item.
If you prefer to sync tax as a line item then provide a Liability account to our support team by contacting firstname.lastname@example.org or from the Contact Us page of this site to set this option.