Tax on ecommerce sales (Xero)
Overview
Find out how Cin7 Omni handles tax on sales orders downloaded from ecommerce integrations, and how to configure your Xero integration to allocate tax on ecommerce sales to dedicated liability accounts.
Tax is a liability attached to the sale of goods and services and payable to the government.
Your ecommerce platforms calculate tax for every sales order. When you download your ecommerce sales orders, Cin7 Omni preserves their tax liabilities. And, so Xero can recalculate those tax liabilities correctly, Omni applies a tax rate to those sales orders, too, via one of two methods:
Matching tax rates (default)
Downloading tax rates (US only)—if you're based in the United States, we strongly encourage you to set up and use this method for handling tax on ecommerce sales.
Matching tax rates
Matching tax rates is the default method.
If you’re based outside of the United States, or if you’re based in the United States and have not set up the downloading tax rates method (below), this is how Omni applies tax rates to your ecommerce transactions.
When you download an ecommerce transaction, Omni will find and apply the matching tax rate (user menu > Settings > Accounting > Tax Rates) to the Alternative Tax Rate field of the transaction.
A tax rate matches if:
Its Tax Rate matches the transaction’s average rate of tax, and
Its State, region, or country matches the transaction’s Delivery State/Region or Delivery Country.
If no such tax rate is found, Omni will apply the tax rate whose Tax Rate matches the transaction’s average rate of tax. Else Omni will apply your default tax rate.
Downloading tax rates (US only)
The downloading tax rates method is available to businesses in the United States with a Xero (or QuickBooks Online) integration only.
For each sales order, the tax rate is simply downloaded from Shopify and applied to the Alternative Tax Rate field in Cin7 Omni.
Typically, the name of the tax rate is (a) the state followed by (b) the rate – for example, MD STATE (6.00%). When the effective tax rate is 0%, though, the name of the tax rate is (a) the name of the integration followed by (b) “Tax” (for example, Shopify Tax).
Don’t override the Alternative Tax Rate field. If you do, that sales order’s downloaded tax rate can’t be retrieved and you’ll create discrepancies between your ecommerce platform, Cin7 Omni, and Xero.
Configure downloading tax rates (US only)
Log in to Cin7 Omni as an administrator.
From the Accounting menu in the navigation, open your Xero integration.
Open Settings.
Open the Settings tab.
Select Upload Ecommerce Tax into a Liability Account.
For each integration listed, enter the code of the liability account to allocate tax to (find the account’s code under Account Code on the Admin > Chart of Accounts tab on your Xero integration dashboard).
Select Save Settings.
Now, when you download ecommerce sales orders, Cin7 Omni will download their effective average tax rates too, and when you sync your sales orders to Xero, the tax liability of each ecommerce sales order gets allocated to the selected liability account.
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB
- Zendesk publishing.4.log-2014405138.zip30 KB