Articles in this section

Tax Settings

  • Updated
Follow
Overview 

The Tax Settings screen provides the ability to review and/or create the Tax Setting Name(s) for  the Avalara Sales AvaTax method or the AS Native Tax method, which will be used to calculate sales tax. 

AvaTax Sales Tax - Avalara’s AvaTax integration calculates sales tax on Billings and estimates sales tax on Opportunities. 

Note: Currently in Accounting Seed, the United States and Canada are the only valid supported countries for tax calculation on Billings and Opportunities with Avalara AvaTax. If you are not in the US or Canada, Accounting Seed Native Tax can be used for tax calculation.

Accounting Seed Native Tax - This is the built-in functionality of Accounting Seed (AS) that is used to calculate tax on Billings, Payables, and Opportunities, as well as support tax calculation for VAT (Value-added tax) and GST (Goods and Services tax). This tool is free of charge as it is included in your subscription. 

 When you upgrade your org to a new Accounting Seed release, a Tax Settings record(s) is automatically created based upon your existing tax method (Avalara Sales AvaTax and/or AS Native Tax). If you are a new Accounting Seed user, the installation process will automatically enable AS Native Tax as a Tax Settings record.

Note: If you are using Avalara’s VAT Reporting, the information in this article is not applicable. Refer to the VAT Reporting Settings article. 

Do you want to:

Review the Tax Settings Record added during Migration

Important: The information in this “Review the Tax Settings Record added during Migration” section is only applicable for existing Accounting Seed users. If you are a new user, please create a new tax settings record based upon your tax method. 

As a part of the post installation of the Winter '23 release, the migration process will automatically configure your existing Tax Settings information to the new process that is available with this release. Therefore, after the installation of this release, there will be no interruption to your ability to calculate taxes. Use the steps below to review the migrated Tax Settings information.  

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Utilities menu, click Tax Settings.
  2. Display a view other than the Recently Viewed list view.

    Tax_Set_List_View_01.png

  3. Under the Tax Setting Name column, based upon your existing tax method, click the appropriate link:
      1. Accounting Seed Native Tax
      2. AvaTax
  4. From the Tax Settings details record page, do the following:
      1. If AS Native Tax is your existing tax method, verify that “Accounting Seed Native Tax” displays in the Tax Setting Name and that the Tax Settings Method is Accounting Seed Native Tax.
      2. If AvaTax is your existing tax method, verify that “AvaTax” displays in the Tax Setting Name and that the Tax Settings Method is AvaTax. Then, review the following information for accuracy:

        Note: If you need assistance on how to locate the below information in Avalara, refer to the Create a new AvaTax Settings Record section. Additionally, if you  need to edit/update any of the below fields, from the Tax Settings record, click Edit. Then review the following fields, which will be populated as part of the migration process:

        Note: When you review the below fields, they will be populated based upon your existing credentials in these fields.

        1. AvaTax License - the AvaTax License name displays as your Salesforce ID number. If you want to change the name to something different, click the hyperlink. Then, click Edit and change the Name field, as necessary. Verify that all other fields display with expected information.
        2. Sales Tax Calculation Mode
        3. Origin Address - the Origin Address name displays as your Salesforce ID number. If you want to change the name to something different, click the hyperlink. Then, click Edit and change the Name field, as necessary. Verify that all other fields display with expected information.
        4. Sales Tax GL Account
        5. Sales Tax Product (if using Line Level Posting)
  5. After reviewing the information in the Tax Settings screen, review the Tax Settings section on the Ledger screen. Navigate to Accounting Home and click the Setup tab. Then, under the Ledger menu, click Ledgers.
  6. Click the Ledger Name for which you want to review the Tax Settings information.
  7. From the Tax Settings section, review the Tax Settings field to verify that your current tax method displays (AS Native Tax or AvaTax).
  8. If AvaTax is your current tax method, verify that the Sales Tax Company Code is accurate.
    Note: If you need assistance on how to locate the Sales Tax Company Code in Avalara, refer to the Edit Tax Settings on a Ledger article.

Return to top

Create a new AvaTax Settings Record

For the AvaTax Sales tax method, the Tax Settings screen allows you to include more than one Tax Setting Name, which can then be mapped to a Ledger with the related Sales Company Code from Avalara.

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Utilities menu, click Tax Settings. 
  2. Click New. The New Tax Settings dialog box displays. 
  3. Enter a Tax Setting Name.
  4. Select AvaTax from the Tax Settings Method drop-down list.
    Note: If you have Multi-currency enabled, the Currency field will automatically display. However, with AvaTax, it is recommended that you remove the Currency field from the Tax Settings object and the AvaTax License object page layouts. Regardless of the currency code selected in this field, it will have no impact on tax calculations. 

    AVTax_Settings_01.png

  5. Click the Lookup icon to search for and select an existing AvaTax License. Otherwise, from the search textbox, Add New AvaTax License. The New AvaTax License dialog box displays.
    Note: If you have multiple AvaTax Licenses, a custom tab can be created for the new AvaTax License object. For more information, refer to the Create a Custom Tab article.
  6. Enter a Name for the new AvaTax License.

    Avalara_02.png

  7. Avalara Endpoint, select the Sandbox or Production radio button. Select Sandbox to test this feature until you are ready to  switch to your Production environment.
  8. Enter the AvaTax Account ID and License Key. This information can be located from your Avalara AvaTax Settings in avalara.com.

    Note: The Avalara Account ID can be located within Avalara from the Settings drop-down menu and selecting All AvaTax Settings.

    AVTax_Settings_02.png

    Avalara_01.png
    Also, in Avalara on the Avalara AvaTax screen, scroll down the page to License and API Keys. Click the link to generate the License Key. A message displays. Click Yes to generate the license. Avalara will email the license key to the AvaTax Administrator.

    The Account Administrator permission level is required in order to view and display the License and API Keys information.

    AVTax_Settings_03.png

    AVTax_Settings_04.png

  9. Click Save. The AvaTax License displays on the New Tax Settings dialog box.
  10. From the Sales Tax Calculation Mode drop-down list, select one of the following:
    1. Shipment - this is the default mode. This mode uses AvaTax to determine the proper sourcing of tax for all of your sales transactions. When Shipment is selected, both the Origin and Destination Addresses are sent into Avalara. Avalara will then determine the proper amount of tax to apply based upon both the Origin and Destination Addresses. The Origin address is set in the Tax Settings record and the Destination Address is set to the Shipping Address on the Billing.
      Note: If the Sales Tax Calculation Mode is Shipment, then a complete and valid shipping address must be entered in order for the Avalara sales tax calculation to function as expected.
    2. Point of Sales - this mode forces the tax calculation to be based off of the Origin Address for all of your sales transactions. Point of Sale is typically used in a retail business where both the Origin and Destination are always the same. In other words, sales are physical in-person transactions at a retail point of sale location. Using this mode, only the Origin Address is sent to Avalara. 
    3. Point of Destination - this mode forces the tax calculation to be based upon the Destination Address for all of your sales transactions. In other words, this is where the buyer takes possession of the item sold. For example, your Sales team travels to customer locations and they deliver products on-site, and you need to force the tax on all of your sales transactions to trigger on the Destination Address, even in mixed-sourcing or origin based states. Using this mode, only the Destination Address is sent to Avalara, which is set from the Shipping Address on the Billing.
      Note: If the Sales Tax Calculation Mode is Point of Destination, then a complete and valid shipping address must be entered in order for the Avalara sales tax calculation to function as expected.
  11. In the Origin Address field, click the Lookup icon to search for and select the related  company address as it displays in Avalara. Otherwise, from the search textbox, click New Sales Tax Address. The New Sales Tax Address dialog box displays. Enter the address  information for related AvaTax Tax Setting Name.

    Note: The Origin Address field can include addresses in the US or Canada.  

    Avalara_03.png

  12. Click Save. The selected Origin Address displays.
  13. Click the Lookup icon to search for and select the Sales Tax GL Account.
    Note: This GL Account should be set up as Type = Balance Sheet and Sub Type 1 = Liabilities.

    Avalara_04.png

  14. If Line Level Posting is enabled, click the Lookup icon to search for and select the Sales Tax Product.
    Note: This is a generic Product that populates the Product field on the calculated AvaTax tax line. This should be assigned a $0.00 standard price and added to the Price Book.
  15. Click Save. The new Tax Setting Name displays on the Tax Settings details page.
  16. To test the connection, click the AvaTax License hyperlink.

    Avalara_05.png

  17. From the AvaTax License page, click Test Connection. If the connection to Avalara is successful, a message displays to indicate that the connection was successful.

    Note: If you need to validate the address, click Validate Address on the Tax Settings screen.

Important: After creating a new Tax Settings record for AvaTax, it must be associated with a Ledger. If the Tax Settings record is not associated with a Ledger, you will not be able to post/unpost any related transactions. For more information, refer to the Edit Tax Settings on a Ledger article. 

Important: As mentioned above, the Tax Settings screen includes hyperlinks to the AvaTax License screen and the Sales Tax Address screen. Once you access either of these screens, a Delete button is available. If you delete the AvaTax License record and/or the Origin Address record that is included as part of a Ledger record, when you attempt to calculate taxes on an Opportunity, an error message will display. Additionally, if the AvaTax License and/or Origin Address that is associated with a customer Account record has been deleted, if you attempt to validate the address on the Account record, an error message will display.

Return to top

Create a new AS Native Tax Settings Record

Using the Tax Setting Name field, you can create more than one “Accounting Seed Native Tax” Tax Setting, which can be mapped to a Ledger to create different Tax Settings for each Ledger. 

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Utilities menu, click Tax Settings. 
  2. Click New. The New Tax Settings dialog box displays. 
  3. Enter a Tax Setting Name.
  4. Select Accounting Seed Native Tax from the Tax Settings Method drop-down list.

    Tax

  5. (Optional) Click the Tax Rounding Threshold drop-down list to select a small tax rounding option. Small discrepancies that are caused by rounding tax calculations will be adjusted up to the selected threshold amount. Keep the following points in mind, if you select a Tax Rounding Threshold.
    1. This is only applicable for AS Native Tax users with the Header Level Posting setting.
    2. The Tax Rounding Threshold adjusts for the highest tax amount that is generated from the tax transactions. For example, if State Tax is the highest tax amount, the adjustment will be performed on that tax transaction.
    3. If the adjustment is higher than the select Tax Rounding Threshold, there may still be a discrepancy between the Sales Tax field on a Billing and the Purchase Tax field on a Payable versus the total tax transactions on the Billing/Payable.
    4. If a tax Rounding Threshold is set with Foreign Currency Billings or Payables, the adjustment will always be in the Foreign Currency amount, which should always be correct (without a discrepancy).
    5. When using multiple Tax Groups with Foreign Currency Billings or Payables, the Ledger’s currency may still have a slight discrepancy. The discrepancy is due to a different calculation that is used to calculate taxes on the Billing/Payable header than the calculation that is used to calculate taxes when transactions are posted.
    6. Users with the following permission levels can edit the Tax Rounding Threshold field:
      1. AS Full Admin
      2. Cash In Accountant
      3. Accounting Manager
      4. Cash Out and Banking
  6. Click Save.
    Note: The AvaTax section of the screen is not applicable to the “Accounting Seed Native Tax” tax method. Therefore, you do not need to complete any fields in this section.

Important: After creating a new Tax Settings record for Accounting Seed Native Tax, it must be associated with a Ledger. If the Tax Settings record is not associated with a Ledger, you will not be able to post/unpost any related transactions. For more information, refer to the Edit Tax Settings on a Ledger article.

Return to top

____________________

Winter_23.png

Winter '25 Release

Release Notes and Schedule

Avalara's AvaTax is available to calculate sales tax in Canada.

Related articles

Comments

0 comments

Please sign in to leave a comment.