• Contents

Handling U.S. Ecommerce Tax in Xero

Last updated 18/01/2021

How Cin7 handles US taxes on Ecommerce and Marketplace orders with Xero.

Overview


U.S. Sales tax can be complicated, especially when you have to handle multiple states, counties, and cities. To make things easy, Cin7 has a special feature that allows you to preserve the fidelity of tax calculated on orders imported from integrated channels.

In order for this to work, you must meet the following prerequisites:

  • Your business must be based in the United States.
  • Your Xero account is integrated with Cin7.
  • Taxes are set up correctly in your ecommerce software - you've probably done this already.
  • Have specific tax liability accounts set up in your Xero account.

It is also likely that you will use a separate tax filing/reporting automation software to ultimately figure out what you owe and to whom.

Setting Up Ecommerce Taxes


To set this up:

  1. While logged in as an Administrator, select Accounting.
  2. Select Xero
  3. Select the Settings gear icon.
  4. Select the box next to Upload Ecommerce Taxes Into Liability Account (U.S. Only).
    You will see that underneath, a new field appears for each integration.
  5. Enter in the account number of your Xero liability accounts into the field for each ecommerce or marketplace.

Using this Feature


When an order is downloaded, the tax will be correctly preserved based on the ecommerce or marketplace's calculation. The appropriate tax will appear in the Alternative Tax Rate field in the Sales Order. The tax amount will be considered when calculating the total of the order.

Upon importing the order to Xero, the tax will be split and posted to the specified liability account.

Modifying Tax Rates

Please note that if you modify a tax rate in the Alternative Tax Rate field at any stage and save the transaction, you will not be able to recreate the unique tax rate.  Please modify this field with care!