Integration with Avalara AvaTax

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

Guide Layout:


Why go for Avalara

Learn more about automating your tax calculation by accessing Avalara’s video library.


The way it works

Workflow diagram of avalara integration


Integrating Zoho Inventory with Avalara

Prerequisites

  1. Avalara integration is only available for organizations whose country is the U.S or Canada in Zoho Inventory.

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

  3. 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 Inventory.

How do I find my Avalara credentials?

Setting up integration

You can set up this integration in two ways:

From the Integrations module

Setup Avalara from Integrations

Avalara setup pop-up

From the Taxes module

Setup Avalara from Taxes

Avalara setup pop-up

End Result

Avalara Success


Impact of Avalara on taxes across different modules

Items

With Avalara integrated, you are no longer required to manually mark an item as either Taxable or Non taxable. Instead, simply enter Tax Codes for each item. To do this,

Tax codes for an item

Once a tax code is associated in Zoho Inventory, 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

Entity code/exemption number for contacts

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 the transaction.


Transactions

Let’s see how this affects a transaction. Sales tax in Zoho Inventory is calculated on all Sales entities such as Invoices and Sales Orders. 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

If a transaction fails to sync with avalara for some reason, you will be able to find a option to manually sync that particular transaction just above the order.


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,

Create the shipping charges as an item. This means you can include it during any transaction and just vary the charges accordingly.


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.


How to manually sync unsynced transactions?

On integrating with Avalara, all your orders and invoices are going to be synced with them automatically upon creation. But there are a few instances where they may fail to sync with Avalara.

Our studies have indicated the most common causes as the absence of a billing address for a contact or having an unverified billing address for a contact.

You can still initiate a manual sync for such orders after updating the necessary information. To do so:


Disabling integration

Integration with Avalara can be disabled anytime by either going to Settings - Taxes or by simply navigating to Avalara under the Integrations module and clicking on the Settings button 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.

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