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Sales Tax Calculation Differences Between your Web Store and Acctivate

This article explains how tax amount calculations between your web store and Acctivate our handled.

Overview:
Acctivate uses Tax Categories to determine sales tax rates on sales orders. However, when orders are imported from a web store, the tax amount may not always match the rate defined in Acctivate’s Tax Category due to differences in tax calculation methods.

How Tax is Calculated

  • In Acctivate:
    Tax is applied based on the Tax Category assigned to the sales order. For example, a Tax Category named "Texas" might apply a flat 8.25% tax rate to all taxable items.

  • In the Web Store:
    Web stores often calculate tax dynamically based on shipping address, using external tax services or regional rules. This can result in different tax amounts than those expected by Acctivate.

Order Import Behavior

  • When an order is imported from the web store, Acctivate uses the tax amount provided by the web store, not what it would calculate based on the Tax Category.

  • This ensures that the total order amount remains consistent between systems.

Tax Category Assignment Rules

  • If the customer already exists in Acctivate, the order uses that customer’s default Tax Category.

  • If a new customer is created, the system uses the default Tax Category for new customers (e.g., “Texas (8.50%)”).

This can lead to scenarios where the Tax Category name and rate in Acctivate do not match the actual tax amount on the order.

Example Scenario:

  • A $100 order is placed via the web store and shipped to Florida, where the tax rate is 7.50%, resulting in $7.50 in tax.

  • Acctivate imports the order and creates a new customer, defaulting to the Tax Category “Texas (8.50%)”.

  • The order in Acctivate shows the Tax Category as “Texas (8.50%)”, but the tax amount is $7.50, not $8.50.

What Happens Next

  • As long as the order is not edited in Acctivate, the original tax amount from the web store will be preserved.

  • If the sales order is edited, the tax may be recalculated based on the assigned Tax Category, potentially changing the tax amount.

  • When the order is invoiced and synced to QuickBooks, QuickBooks will:

    • Recalculate tax using the associated Tax Group/Item.

    • Automatically add any discrepancy as an adjustment line on the invoice to ensure the invoice total remains accurate.

Other Options for Handling Tax 

Other options available include:

  • Integrating AvaTax with both your Web Store and Acctivate
  • Some Acctivate web store integrations include an option to import tax as a line item.