In this article, you will learn about the following Tax Settings:
To get started, navigate to Settings → Taxes from the left navigation menu.
Enabling Tax Calculation
To enable sales tax calculations for your store, enable the Enable Tax Calculation option.
When Tax Calculation is enabled, the platform calculates applicable sales taxes during checkout based on the nexus information configured for your business.
When Tax Calculation is disabled:
- Sales taxes are not calculated.
- Customers will not see taxes during checkout.
- Orders will be processed without tax charges.
Note: Enabling Tax Calculation alone is not enough to begin collecting taxes. At least one nexus location must also be configured.
Managing Nexus Locations
After enabling Tax Calculation, you must configure at least one nexus location.
A nexus represents a state where your business has a tax obligation.
The platform supports two types of nexus:
- Nexus Address
- Economic Nexus
Nexus Address
A Nexus Address represents a physical business presence within a state.
Examples include:
- Corporate Offices
- Warehouses
- Retail Locations
- Distribution Centers
If your business has a physical location in a state that creates a sales tax obligation, you can configure a Nexus Address for that state.
Economic Nexus
Economic Nexus represents a tax obligation based on business activity within a state rather than a physical location.
Businesses may establish Economic Nexus when their sales volume or transaction activity within a state reaches certain thresholds. Different states have different rules, so be sure to consult an accountant or a guide to determine where your Economic Nexus' lie.
Adding a Nexus
The Add Nexus Address section contains a list of all U.S. states.
Each state includes:
- Enable
- State Name
- Nexus Address
- Actions
To configure a nexus, enable the switch next to the desired state.
A configuration window will appear allowing you to select the nexus type for that state.
Two options are available:
- Nexus Address
- Economic Nexus
Adding a Nexus Address
If you select Nexus Address, enter the physical address associated with your tax obligation in that state.
After entering the address, click Add Nexus Address.
The modal window will close and the address will appear in the Nexus Address column for that state.
Adding Economic Nexus
If you select Economic Nexus, no address information is required.
Simply click Add Economic Nexus.
The modal window will close and the Nexus Address column will display Economic Nexus for the selected state.
Editing and Removing Nexus Configurations
Configured nexus entries can be modified at any time.
To manage an existing nexus configuration, click the three-dot menu in the Actions column.
Two actions are available:
Edit Details
Allows administrators to modify the nexus configuration.
You may:
- Update an existing Nexus Address.
- Change a Nexus Address to Economic Nexus.
- Change Economic Nexus to a Nexus Address.
Remove
Removes the nexus configuration for the selected state.
When a nexus is removed:
- The nexus information is deleted.
- The state is automatically disabled.
- The state will no longer be used for tax calculation purposes.
Saving Tax Settings
After configuring your nexus locations, click Save in the upper-right corner of the Tax Settings page.
Once saved, the configured nexus information is used when calculating taxes during checkout.
Tax Calculation Example
If Tax Calculation is enabled but no nexus locations have been configured:
- Customers will not be charged sales tax during checkout.
If Tax Calculation is enabled and one or more nexus locations have been configured:
- Applicable sales taxes will be calculated based on the customer's location and your configured nexus information.
That's everything you need to know about the Tax Settings. In the next article we will look at configuring the Checkout Settings.