Taxes – General Options…

Setting up taxes and tax rates is one of the first tasks you want to perform when setting up your Online Store. Taxes can be a complex matter, but Honeycomb Go has streamlined this process for you.  The process is pretty straightforward.

PLEASE NOTE, WE ARE NOT TAX EXPERTS.  OUR ADVICE HERE IS ONLY ON HOW TO SET UP OUR SOFTWARE.  IF YOU REQUIRE TAX ADVICE, PLEASE CONSULT A TAX CONSULTANT OR ACCOUNTANT.

The first thing you need to do, is ensure taxes are enabled.  Go to MY SETTINGS > MY BUSINESS – ONLINE STORE menu item.  Select the first tab, on that page you will see the tickbox “Enable Taxes”.  Ensure this is ticked.  Provided this is ticked, a tab will appear on the MY SETTINGS > MY BUSINESS – ONLINE STORE menu item, called Tax.  This article discusses how to configure this section.

TAX SETTINGS – GENERAL

On the Tax tab of the My Settings > My Business – Online Store menu item, there are various options to help you set up taxes, namely:

PRICES ENTERED WITH TAX

This option is perhaps the most important when managing taxes in your store, as it determines how you input product prices later on.

“Yes, I will enter prices inclusive of tax” means that all Online Store prices are input using your store’s base tax rate.

For example, in the UK you would input prices inclusive of the 20% tax rate e.g. You enter a product price of £9.99 that includes £1.67 tax. A customer in the UK would pay £9.99 as defined, and a customer in the US would only pay £8.32.

“No, I will enter prices exclusive of tax” would mean that your Online Store prices need to be tax exclusive.

Using the same example from above, a UK shop would enter 8.32 at the product price. A tax of 20% would be applied on top of this during checkout making the amount payable £9.99.

Details of Tax Calculations:

The tax calculation for tax-inclusive prices is:

tax_amount = price – ( price / ( ( tax_rate_% / 100 ) + 1 ) )

The tax calculation for tax-exclusive prices is:

tax_amount = price * ( tax_rate_% / 100 )

CALCULATE TAX BASED ON

This setting determines which address is used for tax calculations.

• Customer billing address
• Customer shipping address (default)
• Store base address

Note:  If you use store base address, taxes are always based on your store location and not your customer’s location.

SHIPPING TAX CLASS (i.e. WHAT TAX RATE APPLIES TO SHIPPING)

Generally speaking, the “shipping tax class” is inherited from the item being shipped, e.g., Shipping a reduced rate item such as baby clothes would also use a reduced rate. If this is not the case in your country/state, you can choose a different tax class.

In the case of multiple tax rates in the order, the shipping tax will be applied as follows:

• If you have a product with the Standard rate in the order, it will be used for the shipping regardless if this rate is high or low;
• If you don’t have a product with the Standard rate in the order, then the first rate found in the Additional tax class section will be used for shipping.

The goal is to make sure that your highest rate is listed the first in the Additional tax class section if you don’t use the Standard class and if you need the highest tax rate to apply to shipping, for example.

ROUNDING

If you enable Rounding tax at subtotal level, instead of per line, the rounding is done at the Subtotal level. Check your tax jurisdiction to know if this is done.

DISPLAY PRICES IN THE SHOP

This option determines how prices are displayed in your Online Store. Choose from Including tax or Excluding tax.

NOTE: We recommend setting this series of settings to Excluding Tax if prices are entered without tax, or Including Tax if prices are entered including tax.  NOTE:  If these settings are not consistent, then for a certain combination of product prices and tax rates, customers may see an off-by-one rounding error. This happens when the calculated price (whether including taxes or not), has more decimal precision than allowed to be displayed by the shop, and as a result, prices are rounded.

DISPLAY PRICES DURING CART AND CHECKOUT

This option determines how prices are displayed in your cart and checkout pages – it works independently of your Online Store prices. Choose from inclusive/exclusive tax display.

Note: The address field needs to be filled in to get tax calculations if you have a tax table that distinguishes between locations.

PRICE DISPLAY SUFFIX

This option allows you to change display to: “Prices include __% tax/VAT” or anything appropriate for your store (for example GST). You can use these two placeholders if you want to have text before and after the price:

• {price_including_tax}
• {price_excluding_tax}

For example: “Price incl. VAT: {price_including_tax}” will display as: “Price incl. VAT: £15”

DISPLAY TAX TOTALS

This determines if multiple taxes get displayed as one total during checkout, or as an itemized list of taxes.