Magento

Magento Developers: How to Optimize Sales Tax Collection for your Clients

by Jennifer Dunn

Magento developers sales tax TaxJar

When developing a Magento eCommerce store, it’s important to take care of the backend basics, like sales tax.

TaxJar aims to make it easier for you to help your clients collect sales tax, so you can all get on with the more fun and lucrative parts of developing and running a Magento store.

What to Ask Your Client Before Setting up their Sales Tax Collection

Knowing these three things will help you set up sales tax collection in your client’s Magento store.

Where does the merchant need to collect sales tax?

In a nutshell, U.S. merchants need to collect sales tax in states where they have sales tax nexus. Sales tax nexus is just a fancy way of saying a merchant has an office (even a home office), store, warehouse, personnel or other business activities in a state.

U.S. merchants will always have sales tax nexus in their home state, but they may have nexus in other states. (Non-U.S. merchants with a U.S. presence may also have sales tax nexus in the U.S.)

Example:

Manny Merchant works from his kitchen table in Nevada, but has a customer service employee in Florida and inventory for sale in a warehouse in Iowa. Manny Merchant has sales tax nexus in all three of those states – Nevada, Florida and Iowa.

If your client isn’t sure where they have sales tax nexus, you can direct them to our blog post on sales tax nexus, or a vetted sales tax expert.

If you have sales tax nexus in a state, and you sell taxable products in that state, then you are required to collect sales tax in that state.

Are the products the merchant is selling taxable?

The vast majority of “tangible personal property” sold by merchants is taxable. But certain categories of merchandise are not taxable in every state.

Major categories of products that are sometimes non-taxable include grocery food, clothing and digital downloads.

Very few merchants sell only taxable or only non-taxable products. Most sell a mix of product categories. So it’s important to set up sales tax collection so your clients automatically collect sales tax on their taxable products and leave tax off their non-taxable products.

Usually, but not always, your clients will know if the products they’re selling are taxable. (Keep in mind what’s taxable can vary from state to state.)

Is the merchant already collecting sales tax?

Sometimes your client is already collecting sales tax through Magento. Find out if they have any specific sales tax rules they’d like to keep active.

Setting Up Sales Tax Collection for your Client

As part of our Premier Partnership with Magento, TaxJar’s SmartCalcs is free for all Magento merchants. SmartCalcs will automatically collect sales tax at the right rates, every time. SmartCalcs works for merchants who need to collect sales tax in the United States, European Union, Canada and Australia.

Get TaxJar SmartCalcs for Magento here:

Download TaxJar SmartCalcs for M1 (documentation)

Download TaxJar SmartCalcs for M2 (documentation)

Next, depending on the version of Magento you plan to use, follow the outlined steps to install TaxJar and configure your client’s nexus states and tax codes for products that may not always be taxable. Does your client have custom rules set up? No problem. We tie our custom rates to your client’s existing tax rules where they exist.

From there, TaxJar SmartCalcs sales tax API is a seamless part of the administrative end of your client’s Magento store.

Added Sales Tax Features for your Clients

TaxJar sales tax collection is absolutely free for Magento merchants, but that’s not all TaxJar does.

Our TaxJar Reports will connect with Magento and any online sales channels your client uses and report how much sales tax they’ve collected. We’ll then turn that into a return-ready sales tax report, or even AutoFile their sales tax returns.

TaxJar Reports starts at just $19/month and has no setup fees or contracts. AutoFile is just $19.95 per state per filing.

Have questions about getting your clients set up with TaxJar SmartCalcs? Leave a comment or contact us at success@taxjar.com!

Start your 30 day free trial of TaxJar. No credit card required.
Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
Subscribe to the TaxJar Sales Tax Blog
ErrorHere