Following this guide will help users ensure that the correct tax rates are applied to their products, leading to less work when checking out. By providing specific configurations and troubleshooting advice, users can resolve common tax-related issues efficiently and ensure a seamless checkout experience.
Tip: There are two different methods you can use to track tax for your products or services. The first method is Category Tax and the second is Product Tax. We recommend using Category Tax to save yourself manual work when it comes to applying a blanket tax to many products at one time. Understanding the interaction between these two methods is also crucial. For instance, if product-level tax is configured, it will override the category taxes; however, if the product-level tax is disabled, the category tax will prevail.
Add Tax Rates to Categories
When configuring categories, consider that taxes set at the category level will typically apply to all items within that category. If a product needs to be excluded from this, it must have a product-specific tax setting.
Tip: For example, let's say that you offer Skinbetter Skincare. You've created the category for Skinbetter, now you want to apply an 8.25% tax to everything that falls under that category. You'll need to add that tax rate to the category. Follow the steps below to do so!
1. Navigate to https://app.aestheticrecord.com/inventory/products/active
2. Click the "Inventory" tab and "Your Inventory"
3. Click "Add/View Categories"
4. Search for the category that you would like to add a tax rate to
5. Click "Edit" next to the Category, OR "Add Category" if it is not in the system yet
6. Toggle on "Custom tax rule"
7. Click into the location you would like to add the tax
8. Enter the percentage (Taxes vary across states, so make sure to check your required tax rate) and click "Save"
9. After completing the previous step, the tax will be applied to any product under that category when the product is added to the cart!
Adding Tax Rates to Individual Products
If a product should not be taxed, you can achieve this by enabling tax for the product but setting its tax rate to 0%. This ensures it won't inherit category taxes.
Tip: If you only need to add a tax rate to one item, please follow the steps below.
10. Click the "Inventory" tab and "Your Inventory"
11. Select the product you would like to add a tax rate to
12. Click "Tax Settings"
13. Toggle on "Custom Tax Rule"
14. Enter your tax percentage
15. Click "Save"
16. After completing the previous step, the tax rate will be applied to the product when it is added to the cart!
Configuring Taxes for Services and Retail Products Separately
Services can remain tax-free by not assigning tax rates to their categories or individual items and turning off the "Custom Tax Rule." On the other hand, retail products can either inherit category-level tax rates or have custom rates set at the product level.
Addressing Tax for Packages
Taxes for packages depend on the configuration of both package-level and item-level tax settings. For correct taxation, configure the package's setting or ensure items in the package are in non-taxable categories.
Order of Operations: Custom Tax Rule on a Package, Promotion or Variation > Inventory Item Tax > Category Tax
Troubleshooting: Mixed Cart Tax Discrepancies at Checkout
Review individual product tax settings for unexpected discrepancies to make sure products marked tax-off do not unintentionally lower overall tax calculations.
Limitations of Tax Changes on Past Transactions
Tax configuration changes apply only to future transactions and do not update historical sales tax reports.
Tax Calculation Hierarchy:
The logic for taxes follows this flow: If there is no custom tax rule set for a variation, package or promotion, we default to the Inventory Item Tax settings. If there is no tax applied to the Inventory Item, we go up one level and review the Category Tax. If there is no Category Tax, then there is no tax!