Avalara Integration

Introduction

Avalara Integration in Zoho Books is an alternative to the manual method of determining and associating sales tax rates to your transactions.

For rapidly growing businesses constantly discovering new customers, it’s not feasible during every transaction to research and obtain the right tax rate that needs to be specified.

With the new Avalara integration, Zoho Books not only automates your final calculations but also fetches the right tax rates and exemption reasons for all your transactions.

Integration

Prerequisites

  1. Avalara integration is only available for organizations in the U.S and Canada editions of Zoho Books.

  2. Make sure you’ve enabled accrual tax basis from under Settings - Organization profile. Avalara cannot be enabled if you’ve selected cash under tax basis.

  3. Make sure you have an account in Avalara. You can create tax codes for your organization there and use these later in Zoho Books.

You will need the credentials provided there (such as Account number, License key and Company code) to set up the integration here. If no company code is provided, the default company in Avalara will be integrated with Zoho Books.

Setting up integration

Setup Avalara

Taxes and tax rates

Items

With Avalara integrated, you will not need to manually mark an item either Taxable or Non taxable. Instead, simply enter Tax Codes for each item. To do this,

Tax codes

Once a tax code is associated in Zoho Books, Avalara will use a combination of this and the address of the customer to determine the taxability status of the item (tax exempt, partially or fully taxable) in your customer’s location.

Note : You can add/change the tax code for an item from while creating a new transaction, from the tax code field in the item line.

Contacts

Create contact

Similar to item creation, you no longer need to research a customer’s address and taxability status and manually associate a tax rate. It will be provided for you automatically based on the parameters you specified during creation as explained below,

Read more on why geolocation technology is so much more effective than zip codes in obtaining tax rates.

Note : You can change the entity code, exemption number or contact address anytime within a transaction, right from their respective fields before saving it.

Transactions

Let’s see how this affects a transaction. Sales tax in Zoho Books is calculated on all Sales entities such as estimates, invoices, recurring invoices, sales orders and credit notes. When you raise such a transaction for a customer, select the item and save it, Avalara does the following :

Like mentioned above, you can always change the item and contact tax criteria from within a new transaction as well. This is handy for isolated transactions where you might need to make a normally taxable customer tax exempt, or you’re shipping to a different address for a regular customer. Such changes will not be saved for future transactions unless you choose to do so.

Create transaction

Here’s how the invoice looks like with the taxes fetched and calculated.

Final transaction

Other Actions

Taxes on shipping charges

Shipping charges are generally taxable if the item being shipped is taxable.

While creating a transaction, shipping charges needs to be entered as a line item if you’ve enabled Avalara integration. To do this,

Shipping charges

You can also take the easy way out and create shipping charges as an item. This means you can include it during any transaction and just vary the charges accordingly.

Shipping charge

Applying a discount

A discount rate cannot be entered while Avalara integration is enabled, although you can enter a flat discount fee that will be applied on the whole transaction. This amount will be split proportionally among the items in the transaction, except the shipping charges if any.

Discount

Disabling integration

Integration with Avalara can be disabled anytime by going to Settings - Taxes and clicking on the settings icon next to your credentials.

Integration can be disabled at the following levels,

Also, you can choose the address for which the tax is applicable by clicking on Change against the option Applicable For. Select either Use Billing Address or Use Shipping Address and click Save.

If an invoice is created after changing this setting, the address used for tax calculation on sales transactions will be based on the chosen address.

Disable integration

Note : While Avalara integration is disabled, you can no longer edit or send out any transaction created using data from Avalara. In the case of recurring invoices set up using Avalara, invoices generated after Avalara was disabled will not be sent out.

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