Automate Sales Tax & VAT Compliance for Magento
Indirect tax calculation, reporting and filing for Magento sellers.
How To Make Your Magento Store Tax Compliant
How Tax Impacts Your Business
Registering for Sales Tax & VAT and collecting it across all US states can greatly impact your business. You need to understand your tax exposure and reporting obligations. While our software automates tax filings, key considerations include:
- What are my legal risks if I get it wrong?
- Can I structure my business to reduce tax exposure?
- How will sales tax affect my business commercially?
- How do I set up my Magento site to collect tax?
- What if state tax offices audit me or ask questions?
- What about selling on other channels beyond Magento?
Register for a Tax Permit
If customers across multiple territories buy from your Magento store, you may need a tax permit in those territories.
Unique to the US you'll need to understand your Nexus obligations. These will help you know where to register. Each state has its own process, typically requiring a detailed form and supporting business documentation. You’ll need to set up your Magento site to collect tax in states where you have nexus.
Set Up Tax Collection at Checkout in Relevant States & Territories
Tax (VAT & GST): Magento lacks built-in tax collection at checkout, so you’ll need to set this up separately. Import a tax rates database into your Magento back-end or connect to a third-party system to apply rates at checkout.
US Sales Tax: After registering for sales tax in a state, you must charge it on sales to that state. To do this, either import a tax rates database into Magento or integrate a third-party system to request rates during checkout.
Report, File & Pay Tax in all states & Territories
Tax (VAT & GST): Magento is designed for eCommerce, not for filing and paying taxes. You’ll need to submit VAT or GST returns regularly, ensuring accuracy to avoid penalties. Returns can be complex, requiring detailed reporting of sales, discounts, and refunds.
US Sales Tax: Magento does not handle US sales tax filings. You must file returns electronically in each state where you are registered, often monthly or quarterly. Returns are detailed, requiring sales data by jurisdiction and product, along with adjustments for discounts, refunds, and tax holidays. Accurate reporting is crucial to avoid severe penalties.
Yonda Manages Your Magento Tax
Running an online business on Magento is tough without global tax worries. Yonda simplifies Sales Tax, VAT, and GST, keeping you compliant worldwide.
Yonda's core tax services:
Connect Magento to Yonda’s Platform
Connect your Magento store to our platform with one click. We’ll automatically import transactions for filings and nexus analysis—once connected, you’re good to go.
We Help you Set-Up
Add the correct tax at checkout based on products and shipping address. Connect to Yonda for automated tax calculations.
Sales Tax & VAT Registration
Based on your tax obligations, our expert team will help register your business in all states, regions, or territories where you need a tax permit.
Automated Sales Tax & VAT Return Filing
Send Yonda your sales data each month so we can review and file your tax returns on time. You can upload it manually or set up automatic uploads with API integration.
Complimentary Nexus Analysis
Send us your Magento Orders report (US sales only), and we'll analyse where you may have triggered or are nearing economic nexus. Nexus rules vary by state, but Yonda simplifies the process. Some states will also include sales made off Magento in this as well.
A Dedicated Tax Manager
With Yonda's dedicated Account Manager, you don’t have to handle tax alone. Your account manager understands your business, provides tailored advice, and is ready to answer your questions. Contact us to learn how Yonda simplifies sales tax for your Magento store
Why It’s So Important to Register for Sales Tax, VAT & GST
Failing to register and pay Sales Tax or VAT can lead to serious legal and financial trouble. States can demand back taxes with heavy penalties—and the chances of getting caught are very high! In addition to the financial penalties non-compliance also brings other risks, including:
You may fail due diligence when selling or listing your business.
Your Magento store could be shut down by authorities.
Your reputation could suffer permanent damage.
Your product may be banned in multiple jurisdictions.
Does This Apply to
US Sellers Only?
No. While it is more likely a State will find and penalise a US business if they are not complying, the sales tax legislation applies to all merchants who sell into the United States. It doesn’t matter if you export your products from outside the USA or have a local fulfilment – if you sell to a State you need to consider your Nexus.
US Sales Tax is a state-level consumption tax
If you sell to US states via Magento, you may need to charge it, as no federal law governs sales tax nationwide.
The tax is imposed at a state level, so there is no federal law which governs the tax for the USA as a whole. The first state to implement a sales tax was West Virginia in 1921 and it has now been adopted by 46 states (and also Washington DC).
Although the tax is charged by the state and local authorities, it is administered by the seller who is responsible for charging it. Magento merchants must charge sales tax if they have ‘Nexus‘ in the state, which is the USA’s way of saying “a legal obligation to register and collect sales tax”.
Every state has different rules, so it is not so simple to know where you have to register.
Does Magento Collect and Remit Sales Tax?
No, Magento does not collect and remit sales tax on behalf of its sellers. This is because Magento is not a marketplace facilitator, and therefore, does not need to legally automatically charge sales tax on purchases. As a result, Magento sellers are responsible for collecting and remitting sales taxes to the appropriate US states.
Because of this, sellers may be left overwhelmed or confused by the process of sales tax with Magento. Sales tax is complicated, and doing it alone can be even more so. However, Yonda is here to help. Our team of experts and automation software can make collecting, remitting and filing sales taxes now easier than ever for Magento sellers.
To get started, simply get in touch.
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