NetSuite is a powerful ERP tool, but do you know how to leverage it in the right way for your business? Follow along as we walk through different tips & tricks for common Ecommerce use cases that we've seen used successfully throughout our years working alongside other merchants.
Tax setup and how order tax amounts flow from the sales channel down to NetSuite
How does tax pass from the selling channel (order source) down to NetSuite via Pipe17?
- The selling channel (Shopify, BigCommerce, etc) typically has a tax engine built-in (commonly Avalara), which can be set up to manage all tax codes applicable to your business and apply these to orders at checkout.
- NetSuite also has tax logic built-in that can be configured to auto-calculate taxes on sales transactions. Note: the tax engine managing the tax rates here is also Avalara.
- Pipe17 pulls an order through and creates the order in NetSuite with order-level info and line item amounts. Pipe17 lets NetSuite calculate the tax based on the configuration inside NetSuite.
- This calculation in NetSuite is separate from the tax calculation done at checkout time, but should match up as long as NetSuite is correctly configured to allow taxes for that order's specific customer/items/shipping location.
- Your first question might be - why doesn't Pipe17 just insert the tax amount when creating the order? NetSuite actually does not allow this. If you test this out while creating an order in the UI in NetSuite, you'll see that NetSuite doesn't have a field to insert tax amount or percent manually, only the tax code. The tax code is attached to a percentage that would be used to add tax to that line item. NetSuite will automatically add the corresponding code based on the logic below. Avalara manages these codes and keeps them up to date with tax changes over time.
- So as long as NetSuite tax settings are configured, order totals should match up between the selling channel and NetSuite.
How does NetSuite calculate taxes?
NetSuite auto-calculates tax on orders based on:
- Customer is taxable? = T/F
- Item = taxable? T/F
- If true on above, then NetSuite looks at shipping address zip code and
- Checks if your tax settings show that state as taxable and if so, then
- Matches the zip code to the corresponding tax code that exists in NetSuite. The tax code will have a percentage attached to it, which is then added to the order line item and included in order total that shows up in NetSuite.
- Customer is taxable? = T/F
How to check if taxes are configured in NetSuite?
- Using an admin role, go to Setup > Setup Manager > Accounting > Setup Taxes
- Check the settings here first to make sure these make sense based on your needs
- Check Nexuses
- Make sure to add a nexus for any state you intend to charge tax
- Check Tax Schedules
- These should have at least one schedule for non-taxable and one for taxable
- The taxable schedule should have all taxable nexuses included as checked
- Import state tax tables (US)
- This is the step where you can import all tax rates from Avalara directly into NetSuite. These can then be used later on when NetSuite chooses the relevant tax code to use for an order
- If all of that is setup and you are not seeing tax show up on orders, check on the customer record. Is the customer taxable?
- Is the item marked taxable?
- On the order, validate that the shipping address state is one of your nexuses and that there are codes that have been imported for that state.
If all of this looks good - you should see taxes being added automatically to orders in NetSuite. Contact us via our support ticketing system if you have further questions. We are here to help!