How Do I Setup Sales Tax Support?

  1. Initial Configuration
  2. Specifiying Settings for a Customer
  3. Changing A Customer's Tax Rate or Exemption Status

1. Initial Configuration

Settings for sales tax (or VAT, or GST, etc) support consists of one directive in Configuration->Product Settings. Provide the current rate for your locale in percentage format (e.g. 19.6%). If you'd like, you can set all customers to be tax exempt by default. Once this setting is saved, tax support will be enabled for your Cheddar product account.

2. Specifying Settings for a Customer

When a tax rate is enabled, by default every customer in your Cheddar product account is charged that tax rate (unless you've set all customers to be exempt by default). If you need certain customers to have a different tax rate or exemption status than the default, you can make changes to a customer's tax settings via the API or user interface.

2.1 Using the API to Specify Sales Tax Settings

There are three parameters available in the API:

Name Description Sample
taxRate Tax rate charged to this customer if different from default rate. 0.196
isTaxExempt Tax exemption status if different from default product settings. 1 or 0
taxNumber Customer tax number if applicable. Limited to 32 characters. 123456

When creating or editing a customer record via the API, you have the option to pass in a unique taxRate for that customer. If information is contained in the taxRate parameter it will override the default rate in your product settings. Once a taxRate has been added to a customer record, that rate will be applied to all of the customer's subsequent invoices.

You can also update a customer's tax exemption status via the API. Use the isTaxExempt parameter with a value of 1 or 0 to indicate exemption status and the customer's government taxNumber parameter, if applicable, when creating or editing a customer. Any information passed in with these parameters will override your default product settings for tax exemption.

The taxRate, isTaxExempt, and taxNumber parameters can be included in the customers/new, customers/import, customers/edit, and customers/edit-customer API calls (more information about required and optional parameters for these calls can be found in our API Documentation).

If you need to calculate a unique tax rate for individual customers, you can integrate your application with a tax calculation platform like TaxJar or Avalara. These platforms take a variety of factors about your customer and your business into account to give you an accurate tax rate. Once your tax platform performs that calculation and returns a tax rate, your application can pass that rate to Cheddar via the API. If you need to send information back to your tax calculation platform when transactions occur, you can do so by utilizing Cheddar's web hooks. Check out the Web Hook article in the Cheddar Knowledge Base for more information.

2.2 Using the User Interface to Specify Tax Settings

After a tax rate has been configured, three new form fields are available on the New Customer and Edit Customer interface.

New_Customer_Tax_Rate_Screenshot.png

Simply indicate whether or not the customer is tax exempt using the checkbox. If the customer is exempt, check the box. If not exempt, uncheck the box.

If the customer has a tax number, provide the number. The number provided is presented to the customer in the payment receipt default email templates.

If you'd like to charge the customer a different tax rate than the default, enter the tax rate in percentage format (e.g., 19.6) in the tax rate field. Information entered in this field will override the default settings.

The same fields are available when editing an existing customer.

Update_Tax_Rate_Screenshot.png

3. Changing A Customer's Tax Rate or Exemption Status

If you change a customer's exemption status or tax rate in the middle of a billing cycle, future invoices will reflect the new settings.

Similarly, yet conversely, when a Cheddar product account default tax rate is changed (Configuration->Product Settings), customers' current invoices maintain the tax rate as set at the time of invoice creation. In other words, the tax rate in effect at the beginning of each customer's billing cycle remains until the next billing cycle begins. At the beginning of the next billing cycle, any changes you've made to the product's default tax rate will be applied to the new current invoice.

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