Taxes are a crucial aspect of any ecommerce store. It is necessary to work out taxes and other duties of the country or state your business is located in. Well, taxes could be a complex matter as it involves a lot of considerations and calculations, too. However, WooCommerce allows store owners to setup taxes in the simplest way.
So, let’s learn how to set up taxing in a WooCommerce store.
With WooCommerce, you will need to first enable the Tax method to set it up. Follow these steps:
- Go to WooCommerce Dashboard > Settings > General.
- Select the Enable Tax Rates and Calculations checkbox.
- Save Changes.
Configuring Tax Options
Now, let’s learn the steps involved in configuring tax options for our WC online store.
- In the tabs, click on the Tax tab.
- You will be redirected to a new window with several options. Let’s dig deeper into each of the given options.
- Prices Entered With Tax: This option defined how WooCommerce calculate your taxes. There are two options:
- Yes, I will enter prices inclusive of tax: On selecting this option, WC will calculate your price including of the base tax of your e-store.
For instance, you’re in the U.S. One of your customers selects an item worth $25 which includes $2 as the tax. So, customers from within your country will have to pay $25, but a non- American customer would only pay $23. This means the tax will only be applicable to those residing in the US.
- No, I will enter prices exclusive of tax: If you select this option, you will calculate tax as an additional price. The total price will then be displayed at the Checkout step.
- Calculate Tax Based On: This option allows you to determine which location you are using to set up tax form. You can select one of the three options:
- Customer shipping address
- Customer billing address
- Shop base address
- Shipping Tax Class: This class will determine which Tax class will be applied for the shipping. Generally, shipping tax class is based on the products available in the cart. So, if any of your customers adds a product categorized as a different tax rate, then the shipping tax will also be calculated at the same rate. However, if your tax jurisdiction doesn’t comply, then you will need to opt for another class.
For example, if you have an item that should be shipped at no tax, then you will have to select the “Zero Rate” option from the drop down.
Note: Your custom tax class, if any, will also appear in the same drop-down. Refer to the section “Additional Tax Classes” ahead.
- Rounding: This option allows you to round the calculated tax at the sub-total level on the Cart page.
- Additional Tax Class: As mentioned in the section II. c, WooCommerce allows you to create your own tax class. The classed you create will reflect in the drop-down list of the option, Shipping Tax Class. You can configure these classes as per your requirement. Simply add the name of the class in the textbox and it’s done.
We will learn how to configure tax classes later in the tutorial.
- Display Prices in the Shop: With this option, you can control how the taxes appear on site. These taxes will be displayed on the product listing page of your online store. Choose from the drop-down as per your requirement.
- Display Prices during Cart and Checkout: Here, you can choose to select if whether prices will be displayed inclusive or exclusive of tax on your Cart/Checkout pages.
- Price Display Suffix: You can define what type of tax you are charging to the customers. Ex: inclusive of VAT, etc.
- Display Tax Totals: You can determine how you want to display total tax: whether to show multiple taxes clubbed together as one or all separately.
- Save Changes.
Configure Additional Taxes
Now you know that you can add your custom taxes for your e-store. So, let us understand how to configure these additional taxes.
- Go To: Tax > Tax Options > Standard Rates.
- You will be redirected to a new window with a table. See image.
- Click on “Insert Row” to add tax rates. You can add as many numbers of tax rates based on country/region/zip code. Further, you can also define tax rates based on the country or region you want.
Note: The “Priority” column allows you to layer rates on top of another.
Now, let’s understand this with an example. Say, the standard tax rate percentage for shipping items to the zip code 94209 California is 7.75%. Further, shipping rate to the zip code 33124 is 8.9%. These taxes now will be reflected on the cart/checkout page to calculate the total amount for a particular customer.