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Automated Sales Tax Compliance With Pre-integrated TaxJar And Avalara APIs In Yo!Kart

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Determining, calculating, and collecting sales tax on individual products is crucial for an eCommerce business owner to avoid legal penalties and effectively operate an online marketplace. Every state/country imposes separate tax charges on the sale or purchase of products in the region. For instance, in Colorado, each transaction on Amazon.com includes a 2.9% sales tax fee while in Illinois, a 6.25% base tax rate + city tax is levied on similar purchases. 

For an online business to successfully penetrate the market across borders, incorporating taxes on individual products in the marketplace becomes fairly crucial. This is why Yo!Kart comes with an in-built tax management module that empowers business owners to define the tax structure and rate on individual product categories. 

There are two commonly adopted tax structures:

  • Single tax structure: Where the entire tax is imposed as one value.
  • Combined Tax Structure: It is an aggregate of individual tax components. For instance, GST (Goods and Services Tax) in India is a combination of SGST, CGST, and IGST taxes.

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Sales Tax rates vary from state to state (county to county), especially in countries like the USA, where the states may charge taxes on purchases of goods from vendors with or without a physical presence in the state, according to the US supreme court decision on South Dakota v. Wayfair Inc. case.

Here is a breakdown of the sales tax rates in 50 US states for which both TaxJar and Avalara API offer apt compliance solutions.

Source: Sales Taxes in the US

Prior to the latest release of Yo!Kart V9.3.0, sales tax for individual product categories could only be entered manually by the admin in a Yo!Kart-powered marketplace. To streamline tax management for business owners and ensure hassle-free sales tax calculations in online marketplaces, Yo!Kart team has integrated two powerful tax service APIs – TaxJar and Avalara. This ensures that your business isn’t falling behind on taxes.

Why are TaxJar and Avalara APIs preferred as tax service integrations?

  • Top-rated: With a real-user satisfaction score of 90 and 74, respectively, TaxJar and Avalara are among the highest-rated sales tax compliance software, according to G2
  • Accurate: Both software deliver extensive tax compliance solutions and perform millions of sales tax calculations accurately and in real-time. 
  • Automated updates: Any tax rate updates at the state, city, or district level are automatically incorporated into the eCommerce marketplace. 
  • Global support: While TaxJar supports tax rates in the US, Canada, Australia, and the European Union; Avalara API supports tax rates in 79 countries ensuring a truly global tax compliance solution for marketplaces.
  • Trusted: Top commercial modern-day giants trust both TaxJar and Avalara. For instance, TaxJar is trusted by Coca-Cola, Quimbee, Microsoft, and many other modern-day giants. Similarly, Avalara offers automated tax compliance solutions to Pinterest, Zillow, Adidas, and other big corporates.
  • Saves time and resources: Both software automate sales tax management so marketplace owners can focus on core business processes without worrying about regulatory non-compliance concerns.

How does the Sales Tax Compliance Process work in Yo!Kart?

To automate sales tax compliance in Yo!Kart, the admin needs to activate either of the two pre-integrated tax service APIs. Go to Tax Services under System Settings -> Plugins in the admin dashboard to enable the service. 

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Once activated, the sales tax process in Yo!Kart works this way:

  • Admin creates a tax structure (single or combined) under Manage Tax Structure in the dashboard. 
  • Tax management module synchronizes with the enabled/configured tax service API and automatically displays categories linked with the API
  • Admin/seller links products with the listed tax categories 
  • Next, during check-out, the sales tax is applied based upon the buyer’s shipping address 
  • Once the transaction is complete, the admin collects and remits sales tax in the state 

The admin can also use the in-built tax management module (in case neither of the APIs is enabled) to enter tax categories or set/change tax rates manually. This ensures streamlined marketplace operations while incorporating sales tax compliance effectively. 
For complete working of the sales tax process, check out our admin manual.

Have additional queries on automated tax compliance in Yo!Kart?

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