Setting Up Taxes on Squarespace Ecommerce

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Running a business online can be an incredibly lucrative vocation, if you get it just right – but as with any other kind of enterprise, you still have a responsibility to keep on top of your tax obligations. 

Luckily, one of the many features that Squarespace offers its users is that you’re able to relatively simply set up taxes within its framework. We’ll be exploring how to do so today – just keep in mind that none of what we’ll be discussing should be construed as financial advice, simply a how-to. 

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Before Getting Started

There are a few tax best practices it’s worth keeping in mind during this setup. 

For example, tax rates don’t apply for gifts and donations. For physical product purchases, the recipient’s shipping address determines the tax – and for digital and service products, tax is determined by the billing address instead. This only gets overridden if the buyer also purchases a physical product to a shipping address at the same time. 

Member area memberships have their tax determined by their billing area postal code. 

Are There Limitations?

There are certain limitations it's always worth keeping in mind during the Squarespace tax setup process. 

For example, you won’t be able to exempt certain customers from paying sales tax altogether – and you cannot set different tax rates based on the product being sold. 

However, US-based users can take advantage of automatic rates that smartly put products in the right tax brackets, and this can help you through the process. 

How to Add Country Tax Rates

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Each country to which you ship products will need to have tax rates added. Fortunately, setting this up via Squarespace is not too difficult. 

Begin by clicking Commerce and then Taxes from your Home menu. From there, you can see any existing tax rates you have set up, and click the plus to add more. 

If you’re yet to add any, simply choose Manual Setup and Add Rate. You can then search for a country by name, or find it in the drop-down menu. 

If you’re instead creating tax rates specific to US states, those have their own menu too. You’ll need to click Select State to add a tax rate for each state accordingly. 

Make sure you name your tax rates effectively, especially for non-US taxes. Click save to keep moving forward when you’re done. 

How to Add Canadian Province Tax Rates 

The option to collect taxes in Canada is clearly marked, but you’ll still need to set up the provincial tax rates for the country too. Luckily, doing so is pretty intuitive through the menu. 

Remember to switch on ‘Charge Taxes on Member Areas and Services’ in this menu too, if you’re required to do so for what you sell. There’s similarly a toggle to charge tax for shipping, as required. You can even choose whether to show a combined rate or list taxes separately during invoicing. 

Once you have made the right changes, click Add, and then Save. 

How to Add Local Tax Rates (United States) 

Tax codes can vary by ZIP code or ZIP code range, so make sure you go into this process with accurate information when setting these details up. 

Through this menu, you’re able to determine the state tax rate, but then make the appropriate adjustments for single ZIP codes or ZIP code ranges, which we will explore below. 

Keep in mind that state and province tax rates combine. The reason you’ll need to create multiple local tax rates accordingly is to accommodate those states where these local rates are variable. 

Single ZIP code/Range of ZIP codes 

To add a tax rule for a single ZIP code, it’s a straightforward process. Click ZIP Code, add the ZIP code and tax rate accordingly, click Add, and then click Save. 

For a range of ZIP codes, the menu will give you the option to define the start and end numerical values for that given range. Add the start and end ZIP codes for the region in question, then click Apply and then Save. 

Tax-Inclusive Pricing (Optional) 

Squarespace gives you the option of customizing whether or not sales tax is included in the listing price, or in order receipts. This means different things to different businesses, but you’re free to tailor things accordingly for your organization’s needs. 

Once you’ve set up your manual tax rates, making these adjustments is simple. In the Home menu, click Commerce, then click Taxes. Open the ‘How tax is added’ menu, select ‘Include in price’, then click Save. 

How Taxes Are Calculated and Shown in Orders 

With all this setup complete, your customers will see how taxes are applied to their orders at the point of checkout. As we’ve touched on, that means physical goods have tax rates calculated by the recipient’s delivery address; and digital goods, by the billing address. 

Remember, Launch Happy is always on hand to streamline the complexities of running an online business – check out our guides and services to find out more.