To set up a MicroBiz Sales Tax Rule is 5 Steps:
Step 1 – the first part of the rule is who gets taxed – which Customer Tax Class applies to this rule. For most business and customers there will be a simple default taxable customer rule that applies. Most customers are regular customers that pay sales tax if your state/province or location charges sales tax on purchases. You may also create non-taxable customer or maybe even a wholesale customer to keep track of customers that may need different rules to apply to them. Default Customer
Step 1B – Create a customer Group called Taxable or Retail Sales and assign it the customer tax class above (we are eliminating this step soon to simplify things)
Step 2 – the second part of the rule is what gets taxed – which Product Tax Class applies to this rule. For many retailers there is a single tax rule that applies to the products they sell and many of us have to keep track of both taxable and non-taxable items. Maybe sporting goods are taxable and clothing is not. Maybe food and medicine is taxed at one rate and general merchandise is taxed at a different rate.
Step 3 – which Tax Rate applies to this rule - Tax Rates include both the percentage tax levied as well the jurisdiction or location of the tax rate. In Florida there is a 6% state wide rate. Only enter as much address as necessary in a rule. A state-wide rate just enter the country and state and rate. Use a descriptive name like “IL State Sales Tax 6.25%”.
Step 4 – Set up a Tax Rule:
- Rule Name: ‘Illinois General Merchandise (6.25%)’
- Customer Tax Class: Taxable Customers
- Product Tax Class: Taxable General Merchandise
- Tax Rate: Illinois General Merchandise (6.25%)
This means if you sell a taxable item to a taxable customer in Illinois the 6.25% rate will apply.
Step 5 – define your store as being in Illinois. Now when you sell items from your Illinois store the ‘Illinois General Merchandise (6.25%)’ rule will be applied to those items being sold.
If you have a store in a jurisdiction that has multiple taxes being applied like state and county taxes you have 2 options:
- You can set up your Tax Rate to include both taxes So if your store is somewhere like Miami Beach, Florida with a 6% state rate and a 1% Miami-Dade County rate you simply create a rule for your Miami Florida Store at 7%.
- You can also set up the separate rates and set up separate rules if you want to see the taxes collected separate on your reports. This may be useful if you have to split these numbers out on your weekly or monthly tax reports when you file and pay your sales and use taxes. To accomplish this you set up a Florida Tax Rate of 6% and a Miami-Dade County Tax Rule of 1%. Then a Florida Tax Rule and a Miami Dade County Tax Rule. Both of these will apply when you sell a taxable product to a taxable customer at your store in Miami Beach, Florida. The trick here is to set the priority of both to zero so both rates apply to the base purchase amount.
If you live in a jurisdiction where tax is compounded like Quebec. Set up your GST tax rule with priority 1 and your Quebec PST rule with priority 2. The PST will apply to both the base purchase amount and the GST.
If you have been using Magento you will see this works just like Magento sales taxes. The one difference is instead of using the customer ship to address to determine the tax jurisdiction to apply to the transaction we use the address of the store.
Always Round Up
If you're in Florida or Maryland check this box on your tax rate setup. It forces a rounding up of the final tax subtotal so any fractional penny is rounded up to the next full penny (this is what the 'bracket look up table' is doing).
Luxury Tax Rules
If you are in New York or Massachusetts use the Luxury tax option on your rate for Clothing & Shoes. Since General Merchandise does not fall under the luxury tax rule, only clothing and shoes then you will need to define 2 rates one for the luxury tax rate and one for standard rate. e.g. MA 6.25% Lux Tax and MA 6.25% Gen Merch.
New York - 4% State Sales Tax only applies to garments whose price after discounts is more than $110.00. In some jurisdictions the local taxes are also exempt; in some the local taxes are still levied. The 4% rate is applied to the entire amount charged for the item.
- Check Luxury Tax Option
- Set Threshold to $110
- Luxury Tax Applies to Entire Amount
Massachusetts - 6.25% State Sales Tax only applies to garments whose price after discounts was more than $175.00. The 6.25 applies only to the amount above the $ 175.00 threshold.
- Check Luxury Tax Option
- Set Threshold to $175
- Luxury Tax Applies to Amount Above Threshold