Taxes
Articles on: Taxes
Launch Cart allows you easily configure tax rates that you can charge to your store's customers. To edit your tax settings, go to > Settings > Taxes
You may add multiple tax rules to your Launch Cart store to calculate taxes for your store’s orders. Each rule has a name, a priority, and rates.
Each rule has priority. Taxes for a rule are either added to other rules with the same priority or compounded with rules of a lower priority. Different jurisdictions require different applications of tax rules, and the priority setting gives you a tool to assist with this calculation.
Priorities can be described using this example: For each of these examples, let’s assume an order with a taxable amount of $100 USD. These can be configured in more complex forms than the provided examples, but let’s cover three of the most common use cases.
Priority example: single tax
For this example, we have a single tax rule with a priority of 1. This rule has an effective rate (see rates, below, for more fine-grained implementation) of 5%.
Since there’s a single tax rule, the calculation is simple: a taxable amount of $100 plus 5% is $105.
Priority example: two independent taxes
In this case, let’s apply a provincial or state tax of 4% and a federal tax of 3%. Both taxes have a priority of 1 in this case, so the taxes are added together:
4% of the taxable amount of $100 is $4 (this is the provincial/state tax)
3% of the taxable amount of $100 is $3 (this is the federal tax)
the total applicable taxes, in this case, is $4 + $3 = $7
for a total of $107
Most taxes in the US (state, county, city, special) are calculated using this method.
Priority example: compound tax
Some jurisdictions require taxes to compound. Let’s apply the same rates as the previous example: a provincial/state tax of 4% and a federal tax of 3%. The provincial/state tax has a priority of 1 and the federal tax has a priority of 2:
4% of the taxable amount of $100 is $4 (this is the provincial/state tax)
However, the federal tax has a larger priority number (2), so this amount is calculated on the applicable taxed amount of the provincial/state tax: 3% of the taxable amount of $104 is $3.12 (this is the federal tax)
The total applicable taxes, in this case, is $4 + $3.12 = $7.12
For a total of $107.12
Observant readers might notice that the customer is required to pay tax on tax in this scenario. This is a less common implementation, but (as an example) it was the case in the Canadian province of Québec until 2013.
You'll need to configure your tax rates. Rates can be configured for an entire country, state, or zip code (including zip code range).
Auto-calculate rates using TaxJar.com
Launch Cart has a built-in integration with TaxJar's API that will auto-calculate the correct tax rate to be charged to your customers. When the TaxJar toggle is enabled, it takes your store's location address, your buyer’s address, your sale and shipping amount, and the state’s specific sales tax rules into account to make sure you charge your customer the right amount of sales tax on every sale.
Manually inputting tax rates
If you have more complex tax rules you need to abide by or need to charge taxes in multiple states and/or provinces, then we recommend setting your tax rates manually. This will ensure that everything is being taxed correctly. You can manually set your tax rates by turning the "auto-calculate rates" toggle OFF (red position) and this will show you more options to enter in a rate amount manually.
On the main tax settings page, you'll also find additional settings that you can configure. These include calculating taxes on product prices, shipping rates, and if you calculate taxes based on the customer's billing address or shipping address.
If you want to test your tax calculation on your live store, here's how to do it.
Visit your online store URL
Add a product(s) to your cart and proceed to checkout.
Enter a shipping address in a location that you want to check your rates for. Example: If you want to see what tax rates are being charged for California, USA, then you would enter a address inside California.
After you've entered your address, you should see the taxes updated in your order total section. This is what the system will charge a customer who orders from that location based on your configured tax rules.
What if my store is calculating taxes incorrectly?
Double check your tax rules to ensure everything is setup correctly. If you've enabled "auto-calculate rates" for your tax rates, then TaxJar might not be charging taxes for certain locations. In this situation, it's best to setup your rates manually so you can make sure taxes are being charged.
Sometimes TaxJar's "auto-calculate rates" are incorrect because you might have more complex tax requirements that TaxJar is not aware of using our standard integration. It's best to switch to a manually calculated rate in this scenario.
Sales Tax 101 for Online Sellers
Printful Sellers: When do I need to charge tax for US orders?
*Launch Cart does not offer tax advice.
Updated on: 26/07/2022
Launch Cart allows you easily configure tax rates that you can charge to your store's customers. To edit your tax settings, go to > Settings > Taxes
You may add multiple tax rules to your Launch Cart store to calculate taxes for your store’s orders. Each rule has a name, a priority, and rates.
Priority
Each rule has priority. Taxes for a rule are either added to other rules with the same priority or compounded with rules of a lower priority. Different jurisdictions require different applications of tax rules, and the priority setting gives you a tool to assist with this calculation.
Priorities can be described using this example: For each of these examples, let’s assume an order with a taxable amount of $100 USD. These can be configured in more complex forms than the provided examples, but let’s cover three of the most common use cases.
Priority example: single tax
For this example, we have a single tax rule with a priority of 1. This rule has an effective rate (see rates, below, for more fine-grained implementation) of 5%.
Since there’s a single tax rule, the calculation is simple: a taxable amount of $100 plus 5% is $105.
Priority example: two independent taxes
In this case, let’s apply a provincial or state tax of 4% and a federal tax of 3%. Both taxes have a priority of 1 in this case, so the taxes are added together:
4% of the taxable amount of $100 is $4 (this is the provincial/state tax)
3% of the taxable amount of $100 is $3 (this is the federal tax)
the total applicable taxes, in this case, is $4 + $3 = $7
for a total of $107
Most taxes in the US (state, county, city, special) are calculated using this method.
Priority example: compound tax
Some jurisdictions require taxes to compound. Let’s apply the same rates as the previous example: a provincial/state tax of 4% and a federal tax of 3%. The provincial/state tax has a priority of 1 and the federal tax has a priority of 2:
4% of the taxable amount of $100 is $4 (this is the provincial/state tax)
However, the federal tax has a larger priority number (2), so this amount is calculated on the applicable taxed amount of the provincial/state tax: 3% of the taxable amount of $104 is $3.12 (this is the federal tax)
The total applicable taxes, in this case, is $4 + $3.12 = $7.12
For a total of $107.12
Observant readers might notice that the customer is required to pay tax on tax in this scenario. This is a less common implementation, but (as an example) it was the case in the Canadian province of Québec until 2013.
Tax Rates
You'll need to configure your tax rates. Rates can be configured for an entire country, state, or zip code (including zip code range).
Auto-calculate rates using TaxJar.com
Launch Cart has a built-in integration with TaxJar's API that will auto-calculate the correct tax rate to be charged to your customers. When the TaxJar toggle is enabled, it takes your store's location address, your buyer’s address, your sale and shipping amount, and the state’s specific sales tax rules into account to make sure you charge your customer the right amount of sales tax on every sale.
Manually inputting tax rates
If you have more complex tax rules you need to abide by or need to charge taxes in multiple states and/or provinces, then we recommend setting your tax rates manually. This will ensure that everything is being taxed correctly. You can manually set your tax rates by turning the "auto-calculate rates" toggle OFF (red position) and this will show you more options to enter in a rate amount manually.
On the main tax settings page, you'll also find additional settings that you can configure. These include calculating taxes on product prices, shipping rates, and if you calculate taxes based on the customer's billing address or shipping address.
If you want to test your tax calculation on your live store, here's how to do it.
Visit your online store URL
Add a product(s) to your cart and proceed to checkout.
Enter a shipping address in a location that you want to check your rates for. Example: If you want to see what tax rates are being charged for California, USA, then you would enter a address inside California.
After you've entered your address, you should see the taxes updated in your order total section. This is what the system will charge a customer who orders from that location based on your configured tax rules.
What if my store is calculating taxes incorrectly?
Double check your tax rules to ensure everything is setup correctly. If you've enabled "auto-calculate rates" for your tax rates, then TaxJar might not be charging taxes for certain locations. In this situation, it's best to setup your rates manually so you can make sure taxes are being charged.
Sometimes TaxJar's "auto-calculate rates" are incorrect because you might have more complex tax requirements that TaxJar is not aware of using our standard integration. It's best to switch to a manually calculated rate in this scenario.
Sales Tax 101 for Online Sellers
Printful Sellers: When do I need to charge tax for US orders?
*Launch Cart does not offer tax advice.
Updated on: 26/07/2022
Updated on: 28/04/2024
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