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Most people consider setting up of taxes and tax rates a difficult and time-consuming process. It doesn't mean it's a hard nut to crack. You just have to learn it in the proper way from a good source and apply it to your store. WooCommerce provides you with easy to understand options for setting it up on your online store. In addition to that if you go through the contents of this article you will have a smooth sail setting up tax and tax rates in your e-commerce store.
At first, I will explain to you in step by step mode the process of setting up taxes.
Setting up of Tax
You won't be able to set up taxes if you haven't enabled it, thus in order to enable it, go to your dashboard then click, WooCommerce > Settings > General
Now in the screenshot under General options, you can see a checkbox asking your permission for enabling taxes and calculations, tick mark it in order to enable it.
Click Save changes.
Now if you go to the Tax tab and click on it, a few options will appear under the tab.
Clicking on Tax options; the first option in the row, a new page opens up.Now let's go through each of these entries visible on the screenshot of the page.
- Prices entered with tax - This is where you choose whether you want to enter prices inclusive of tax or exclusive of tax.
- Calculate tax based on - There are three addresses in the drop-down "shipping/ billing/ shop" from which you can choose one based on which the tax will be calculated.
- Shipping tax class - Choose a tax class to which shipping falls. If you left the field empty the shipping tax is based on the cart items itself.
- Rounding - You can tickmark the checkbox if you want to round taxes on the checkout page at the subtotal level if not the default round per line will be applied.
- Additional tax classes - In addition to the default tax classes you can list additional tax classes one per line. When you add one and click save changes and it will show up at the top of the page along with other tax classes.
Addition of a new tax class
Now I am going to add VAT to the list. On the screenshot of the textbox, two default tax classes Reduced rate and Zero rate will be visible. Now you can type in the new tax class. You can check out How to Connect WooCommerce to PayPal
Click Save changes.
Now you will be able to see VAT option on the top of the screen along with the other default tax classes.
- Display prices in the shop - You can choose from the drop- down the way you want to display prices in the shop ie; inclusive or exclusive of tax.
- Display prices during cart and check out - If you want to display prices during cart and checkout inclusive of tax you can set it so or the other way around.
- Price display suffix - Here you can give the text to show immediately after the product prices.
- Display tax totals - This entry determines how tax total appears on the display. You can choose whether you want it itemized or as a single total.
Now click save changes.
Setting up of Tax Rate
Setting up tax only isn't enough, you also have to set up the tax rate according to your country and store preferences. I could have explained it along with tax settings, but for the sake of better understanding, I am going to explain it separately.
So let's go to, WooCommerce > Settings > Tax.
Click on the desired tax class for setting up tax rate.
A new page opens up from where you can control everything regarding tax rates.
Now let me explain to you what each of these options means and how details are entered into it.
- Country code - Enter a two-digit country code, Eg: The US for the United States. If you left the field empty the tax rate applies to all the countries.
- State code - Enter a two digit state code, Eg: NY for Newyork. If you leave it empty it applies to all states within the country.
- Postcode / ZIP - Enter Postcode or zip code of the area. Separate multiple values with a semicolon (;). Leaving blank will result in applying to all area.
- City- Enter the name of the city or leave it blank to apply to all cities. If you are entering multiple cities separate them with a semicolon.
- Rate % - This is where you enter the tax rate you want to apply. Do not forget to put percentage sign with the value.
- Tax name - Here you can enter a name for the tax rate.
- Priority - You can choose a priority for this tax rate. Only one matching rate per priority will be used. To define multiple tax rates for a single area you need to specify a different priority per rate.
- Compound - Choose whether or not this is a compound rate by tick marking the checkbox. Compound tax rates are applied on top of other tax rates.
- Shipping - You can tick the checkbox if you wish to apply the tax rate to shipping as well.
There are a few more tabs you should get acquainted with in order to set up tax rates.
Insert row - Clicking on this tab will enable you to create a row for entering each of the above-given entries. You can create as many rows as you want by clicking on the tab.
Remove row(s) - If you want to delete a row you should first select the row by clicking on it then click on this tab in order to remove it.
Import CSV file - This tab is for importing a CSV file containing tax rates into your shop. In order to do that you either need to choose a file from your computer or enter the path to the file.
Then click on the tab Upload file and import.Export CSV file - If you want to export the tax rates you have entered here to another store you can simply click on this tab and import it there the same way shown above.
Now you may click Save changes.