Sales Tax
Autessa Payments adds the right sales tax to every invoice and payment for the places where you're registered to collect it, based on your customer's address and what you sell. You decide where to collect; Autessa calculates, records, and totals the tax by place and month so filing is quick.
This is general information, not tax advice. For your exact situation, check with your tax agency or an accountant.
What it's for
Sales tax trips up most small businesses because the rules change with where you are, where your customers are, and what you sell. Autessa handles the arithmetic and the record keeping. Your job is to register with the tax agencies where you need to, tell Autessa about those places, and file the totals Autessa gives you.
Navigating here
Payments → Sales tax. The section has three parts: What you sell, Where you collect tax, and Tax collected.
Sales tax needs your business address. If it isn't saved yet, the section shows Add your business address to turn on sales tax. See Set Up Autessa Payments.
Key concepts
Where you have to collect
You collect sales tax in a place once you have a strong enough connection to it, often called nexus.
- In the United States, sales tax is set by states and local areas, not the federal government. You usually have to collect in the state where your business is located. You may also have to collect in other states once your sales there pass that state's limit. The common limit is $100,000 a year; some states use $250,000 or $500,000, and a few also count the number of sales.
- Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax. Alaska has only local sales taxes.
- Outside the United States, VAT or GST is national. You register in your home country once your sales pass its limit: £90,000 in the United Kingdom, C$30,000 in Canada, A$75,000 in Australia. EU countries each set their own limit, and sales to consumers in other EU countries count toward a €10,000 EU-wide limit. Sales to businesses in another country are usually reverse charge: your customer accounts for the tax.
Register with the tax agency before you start collecting. Adding a place in Autessa doesn't register you anywhere.
What's taxable depends on what you sell
The same sale can be taxed in one place and not in another. Physical products are taxed almost everywhere. General services are untaxed in most states (Hawaii, New Mexico, South Dakota, and West Virginia tax them broadly). Software subscriptions are taxed in a minority of states, and digital products vary.
You tell Autessa what you sell by picking one of these categories. The category decides how each place taxes your sales.
| Category | Examples |
|---|---|
| Physical products | Handmade goods, retail, merchandise |
| Digital products and downloads | E-books, courses, templates |
| Software subscriptions (for businesses) | Software sold to companies and teams |
| Software subscriptions (for individuals) | Apps and software sold to consumers |
| Services | Consulting, coaching, design, repair, lessons |
| Something that isn't taxed | Sales that are exempt everywhere |
Who does what
| Autessa does | You do |
|---|---|
| Works out the rate and whether your sale is taxable from your customer's address and your category | Register with each tax agency where you need to collect |
| Adds tax to invoices and locks it when you send | Tell Autessa where you're registered |
| Records the tax on every payment and refund | File returns and pay the tax to each agency |
| Totals the tax by place and month | Keep your own records as your tax agency requires |
How to tell Autessa what you sell
- In Sales tax, find What you sell. (The checklist step Tell us what you sell and the button Set up tax take you there.)
- Pick the category that fits. For software subscriptions, also choose who buys it: businesses or individuals. Outside the United States, also say whether you're already registered for VAT or GST.
- Autessa shows what it suggests: Taxed as your category, Collect tax in the places it recommends now, and Keep an eye on places to watch as your sales grow.
- Click Save and add the suggested places, or Save — I don't collect tax yet if you aren't registered anywhere.
You can change the category any time with Change. It applies to invoices you create after the change.
Not sure? Ask the Payments guide "What sales tax do I need to charge?" It asks what you sell and where your customers are, explains its suggestion, and can set the category and add places for you once you click Do it.
How to add a place where you collect tax
- In Where you collect tax, click Add a location.
- Choose the Country and, for the United States, the State.
- Click Add.
The place shows as Active, or Scheduled if it starts later. From then on, invoices to customers there include tax automatically. Until you add at least one place, no tax is added to your invoices.
How to preview tax before you send
- On the invoice form, the Summary shows estimated tax for the customer's address as you type. Tax is locked when you send the invoice.
- In the guide, ask something like "How much tax would a $500 invoice to Seattle have?" The guide shows the subtotal, tax, rate, place, and total, and if no tax applies it tells you why.
How to find what to file
- In Sales tax, go to Tax collected.
- Pick the month.
- Each row is a place, with Sales (after refunds), Tax collected, and the number of Payments. Use these totals when you file with each tax agency.
Payments to customers outside every place you collect in show as No tax location.
What Autessa doesn't do
- Register you with tax agencies.
- File returns or pay tax for you.
- Collect tax in places you haven't added.