|Automatic tax calculations require the Weebly Business plan or better.|
Unlike brick and mortar stores, taxes for online commerce can be tricky. You may need to figure out which tax jurisdiction(s) to charge taxes in and what tax rates to charge.
The good news is that we've built a robust tool to allow you to set up and manage your tax settings. And if you're located in the US and shipping within the US, we provide an automatic tax calculator to make it even easier for you!
Weebly is not a tax advisor, nor an accounting firm.
Tax compliance is your responsibility. We do not guarantee the applicability or accuracy of our tax tools. It's probably in your best interest to speak with a professional about when you should collect taxes, and how much to charge.
When you set up your store, you can choose to use the Weebly automatic tax calculator for US shipments, which will charge tax based on all addresses you've entered (like your store address and your shipping address) and where you ship an order to. If something doesn’t look right for your store, you can turn the automatic calculator off and set up taxes manually.
If you ship to Canada, Weebly pre-populates the current tax rates for the Provinces and Territories. As with US tax rates, you can make adjustments where needed. And if you're located in or shipping overseas, we have the ability for you to create tax rates at the Country level.
|US/US||Automatic Tax Calculator
Manual set up, using editable, pre-populated state rates and local rates based on zip code
|Canada/Canada||Manual set up, using editable, pre-populated rates based on province/territory|
|All other origin/destination combinations||Manual set up based on country|
How US Taxes are Determined
Taxes are all about where you are located and where you are shipping to. If your store only has one location (including where you ship from), you'll only need to charge sales tax for your state (and possibly local sales tax as well).
But if you have locations in more than one state, then you may consider using the Weebly automatic tax calculator. The most important thing to remember about taxes is that you only need to collect them if you have a presence in the state that you are shipping an order to. If you don't, you don't collect taxes.
Before we describe how the tax calculator determines rates, there are a few terms you'll need to be familiar with:
Destination: where the order is being shipped to.
Origin: where an order is shipped from.
Nexus: any and all locations where your company has a physical presence. For example, if you have an office in Scottsdale, AZ, then you have nexus in the entire state of Arizona. If you ship your orders out of a warehouse in Paramus, NJ, then you have a nexus in NJ as well. Weebly uses your Store address, your Shipping address and any other tax-related addresses that you have configured to determine your store's nexus.
Origin-based: when tax is based on the origin of an order. When you ship to an origin-based state (that you have nexus in), you collect taxes based on the state you're shipping from.
Here's a list of origin-based states (as of July 2016):
- New Mexico
* California is a modified origin-based state - state, county, and city taxes are based on the origin of the sale, while district taxes are based on the destination.
Destination-based: when tax is based on the destination of the order. When you ship to a destination-based state (and you have nexus there), you collect tax for the state the order is shipped to.
These states are destination-based (as of July 2016):
- District of Columbia
- New Jersey
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
If you choose to not use the automatic tax calculator, only the destination of the order will be considered. This means that you will need to manually set up your tax rates in consideration of your nexus and local origin vs. destination-based tax laws.
How the Automatic Tax Calculator Works
When using the tax calculator, it first determines if your store has nexus in the state you're shipping an order to. Nexus is determined based on all the store addresses you've told Weebly about:
- Store address: configured on the Store Settings page
- Shipping address: configured on the Shipping page
- Other locations: configured on the Taxes page
The calculator checks all these locations and if you don't have nexus in the state you're shipping to, no taxes are charged.
Note: When a customer has different billing and shipping addresses, only, the shipping address is considered.
Next, the calculator checks to see if the destination state is origin-based. If it is, it uses the tax rate for the origin state. If it's not, then it uses the rate for the destination state.
Here's a flowchart to help you visualize the process:
Let's look at some examples where a store has two locations, Arizona (an origin based state) and New Jersey (a destination based state).
Shipping to an origin-based state
Say the order is shipping from NJ and is shipping to AZ. Because the store has nexus in AZ, they will need to collect tax. Because the state they are shipping to (AZ) is an origin-based state, they will need to collect NJ tax (where the order shipped from).
Shipping to a destination-based state
Now say instead, the order is shipping from NJ to NJ. Because NJ is a destination based state, then they need to collect NJ tax. And if instead the order shipped from CA, they still need to collect NJ tax, because NJ is a destination-based state.
By default, the amount of tax charged is based on the state tax plus any tax incurred at the zip code level. For example, if shipping to Scottsdale, AZ, the state tax is 5.6% and then an additional city tax is added. You can override these amounts, or turn off local sales tax and then only state tax is charged.
Once the state and local tax is determined, the calculator checks to see if the state that is charging tax also taxes shipping. If it does, the shipping charge is added to the total charge for the order items, and tax is calculated based on that amount. If the state doesn't tax shipping, then tax is calculated just on the total of the order items.
How Canadian Taxes are Determined
Weebly pre-populates the Canadian country tax rate and then any additional, compound or replacement tax charged by the province or territory at the destination. For example, if an order is shipping to British Columbia, and extra 7% is added to the country's 5% tax rate. You can override any of the Canadian taxes, but they cannot be deleted.
How Taxes in the Rest of the World are Determined
For shipments outside US and Canada, you'll need to add the tax manually.