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Set up Your Avalara AvaTax Account

This article applies to:Avalara AvaTax

Activate your AvaTax account, accept the terms and conditions, and finalize your company profile to begin using Avalara services.

Activate your account

  1. Log in to AvaTax. Your AvaTax user name and password were sent to you from Avalara Support (support@avalara.com) with a subject line of AvaTax Account Login.
  2. Change your password (required the first time you log in), and then click Next.
    AvaTax-Activate Account-Change Password.png
  3. On the Accept MSA tab, review the terms and conditions, and then click Accept. Your account activates and your account number and license key display.
  4. Save and/or print the account number and license key information, and then click Next.
    This is the only time this information displays. If you're connecting your accounting software to AvaTax, you need this information to do so.
    AvaTax-Activate Account-Account Number and License Key.png
  5. On the Create Company tab, enter your basic company information. If you need help finding your company code, we've got you covered.
     
  6. Click Create & Activate. Your AvaTax account activates and the Get Started tab opens.

Next, finalize the settings for the company you created when you activated your AvaTax account.

Set up your company profile

For an overview of each tab in AvaTax, read introduction to the Admin Console. To set up the company profile of the company you created when you activated your AvaTax account:

  1. On the Organization tab, click the company you just created. The Company section for the company opens, displaying the Company Setup tab.
  2. Open each tab in the Company section, fill in missing information using the following information to help inform your choices, and then click Save:
    • Company Setup tab:

      Field Description
      Company Code

      Entered when you activated your account. Once saved, the company code can't be edited. 

      A unique code for each company. The company code must match the code used by your accounting software to identify the company. See all about company codes to learn how various types of accounting software identify a company. 

      Company Name Name of the company. The company name identifies the company in AvaTax. It should be unique and should match the name in your accounting software.
      Select Parent Company

      If the company is part of a multi-company organization, it's either a parent companyHoverTT.png  or a child companyHoverTT.png.

      A multi-company organization allows a child company to inherit a tax profile (jurisdictions, tax codes, tax rules, and items) from a parent company. In addition, the transaction history of a child company can be combined with that of its parent company for reporting and tax returns purposes.

      A stand-alone company maintains its own tax profile (jurisdictions, tax codes, tax rules, and items). It also maintains an independent transaction history for reporting and tax returns purposes.

      If this is a child company, you must add the parent company first. Once you add and save a parent company, add a child company by selecting its parent company.

      • If the company is a parent company, select <No Parent>.
      • If the company is a child company, select its parent company from the list.
      Separate Reporting Entity A separate reporting entityHoverTT.png is a companyHoverTT.png that reports and files its transaction history independent from any parent company or child company with which it’s associated. A stand-alone company doesn't have this relationship. You must select a parent company to establish this relationship.
      • Select Yes to allow a child company to maintain its transaction history independent of its parent company.
      • Select No to allow a child company to combine its transaction history with its parent company for reporting and tax returns purposes.
      Tax Profile A tax profile is the collection of jurisdictions, tax codes, tax rules, and items that define the taxing policy of a company.
      • Select Create Tax Profile to allow a child company to create and maintain a tax profile independent of its parent company.
      • Select Inherit Tax Profile to allow a child company to inherit a tax profile from its parent company.
      Business Tax Identification Number (TIN) The Business Tax Identification Number (TIN) is a unique, nine-digit identifier assigned to U.S. companies for tax reporting purposes. For a company that's a separate reporting entity, a business TIN or taxpayer ID is required if Avalara files returns on that company's behalf or when a company is participating in the Streamlined Sales Tax Project (SSTP)HoverTT.png. In all other cases, the business TIN is optional.
      Business Identification Number (BIN) The Business Identification Number (BIN) is a unique identifier assigned to a non-U.S. company. This is normally the BIN or value added tax (VAT) identification number. The BIN is optional.
      Company Status

      Whether or not the company has been activated.

      • Active - The company is activated.
      • In Progress -  The company hasn't been activated. To allow AvaTax to process transactions and validate addresses, activate the company.
      • Inactive - The company has been deactivated. Activate the company to use it again.
      Default Company Whether the company has been set as the default company for transactions through AvaTax.
    • Company Settings tab:

      Field Description
      Default Country The default country is the country AvaTax uses for reporting purposes. It’s also used if you subscribe to AvaTax with Global Calculation.
      Base Currency The base currency is the currency AvaTax uses for reporting purposes. It’s also used if you subscribe to AvaTax with Global Calculation.
      Rounding Level The rounding levelHoverTT.png controls how AvaTax rounds the tax amount for a transactionHoverTT.png. AvaTax can round tax amounts at the line level or document level.
      • Line-level rounding
        • Rounds the tax amount to two decimal places for each tax line
        • Discards the rounding difference
        • Adds the tax amounts of each line together to get the total tax amount
        • Occasionally, the sum of each line calculated is a penny less or more than with document rounding
      • Document-level rounding
        • Calculates the tax amount for each line (without rounding), adds those amounts, and then rounds the total to two decimal places
        • Eliminates the occasional rounding inequality experienced with the line-level method by redistributing the rounded amounts
      Freight & Handling Tax Dependency Level The freight and handling tax dependency level controls which line items your freight and handling taxability depend on. This selection controls how close a match the destination address needs to be to the dependent line to be considered related.
      • Choose Entire Document to make the taxability of freight and handling dependent on all line items in the document.
      • Choose Same State to make the taxability of freight and handling dependent on all line items that have the same destination state as the freight or handling line.
      • Choose Same Tax Region to make the taxability of freight and handling dependent on all line items that have the same destination tax region (same set of taxing jurisdictions) as the freight or handling line.
      • Choose Same Address to make the taxability of freight and handling dependent on all line items that have the same destination address as the freight or handling line.
      Test Company Designate a company as a test company to use it for testing purposes only. Test companies don’t generate liability worksheets, Returns filing calendars, or tax notices. When you’re done testing, change this value to No to use the company for actual transactions. Use a test company to test:
      • Integration of AvaTax with your accounting software. For instance, use it to send a test transaction
      • Changes to the tax profile of a company
      • Data importing
      SSTPID Your ID if you participate in the SST program.
      SST Effective Date The effective date if you participate in the SST program.
    • Company Address Information tab:

      Field Description
      Address 1, Address 2, Address 3, City, State/Province, ZIP/Postal Code, Country The locationHoverTT.png of the companyHoverTT.png.
      Validate Validate HoverTT.pngthe company address
      Locate Display an aerial map view of the address
    • Primary Contact Information tab: Name and contact information fields for the company's primary contact

    • Brazil Setup tab: Only required for those doing business in Brazil. Necessary information is given on the tab. (May only be visible if you have the Brazil module for AvaTax.)

Tell us where you collect tax

Add nexus jurisdictions to tell AvaTax when and where to calculate and report taxes for your company. If you've already added nexus jurisdictions in AvaTax and need to make changes, you can edit nexus jurisdictions.

Nexus is the connection or relationship a business has with a taxing jurisdiction in which it sells products and services. This connection obligates the business to calculate, collect, report, and remit taxes. State and local authorities have varying definitions as to what constitutes nexus and who is liable for collecting and remitting sales and use taxes in their jurisdictions. 

Typically, a business must have a “substantial physical presence” in a taxing jurisdiction to have nexus there. The following items may constitute a “substantial physical presence” in a taxing jurisdiction, and therefore an obligation to calculate, collect, report, and remit tax:

  • A corporate office, storefront, or remote sales office
  • Remote employees working from home on the company payroll
  • Owned or rented warehouse space containing owned inventory
  • Owned inventory leased to a customer
  • Sales or marketing representatives making regularly scheduled visits
  • Delivery of product by a company-owned vehicle

Rules governing what constitutes nexus vary from jurisdiction to jurisdiction. Determining exactly how a rule applies to your business is critical. If you're at all uncertain about where you should be collecting and remitting taxes:

  • Contact the appropriate state or local tax agencies. Each state defines the rules for when a business is required to collect and remit sales and use tax. Therefore, each state and their tax agencies are the source for the final decision regarding if you need to collect and pay sales tax based on your business practices.
  • Contact your Customer Account Manager (CAM) for more information about Avalara Professional Services. Avalara provides a variety of professional tax services, including nexus studies, voluntary disclosure agreements, and tax registration services.

Add nexus jurisdictions

 

  1. On the Organization tab, click the Nexus Jurisdictions button Picture of the Jurisdictions button for your new company.
  2. On the Country Jurisdictions screen, select the check box next to applicable country names.
    • Selecting CANADA turns on the calculation of Canadian Goods and Services Tax (GST)HoverTT.png for products or services delivered to Canadian customers. Selecting UNITED STATES in Country Jurisdictions doesn't enable any specific tax calculation behavior.

  3. Change the Begin Date or End Date as needed. For more information, see the Jurisdiction begin dates and end dates section above.
  4. Click Save. The page refreshes, and the Select Jurisdictions button in the row for each country you selected becomes active.
  5. Click Select Jurisdictions for any country.
  6. On the State or Province Jurisdictions screen, select the check box next to applicable state or province names.
    • Selecting Canadian provinces and territories turns on the calculation of Canadian Provincial Sales Tax (PST) and/or Harmonized Sales Tax (HST) for products or services delivered to Canadian customers. If you're a GST/HST registrant, you must select the 5 participating HST provinces: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island. For more information, see what is GST/HST?
  7. For the United States, change the Tax Type selection if desired. For more information, see about tax types and states and tax types.
  8. Change the Begin Date or End Date as needed.
  9. Click Save, but don't leave this page. Depending on the states you're registered in, you may need to tell AvaTax which local jurisdictions you're registered in as well.

Add local jurisdictions

Some states have local jurisdictions with additional tax rules. Local jurisdictions include counties, cities, and special tax jurisdictions in the United States. Tell AvaTax which local jurisdictions you're registered in to get the most accurate rate possible. For more information, see about local jurisdictions.

To add local jurisdictions:

  1. On the State Jurisdictions screen, after you select and save the states to register in, click Select Jurisdictions for any state for which the button is active.

    AvaTaxCalc-Organization-TaxProfile-SelectJurisdictionsforaStateorProvince.png
  2. On the Local Jurisdictions screen, click View Jurisdictions to view the compulsory local jurisdictions, if desired.
  3. For each state in which you need to select local jurisdictions, choose how to maintain optional local jurisdictions:
    • Selective
      • You select and maintain the optional local jurisdictions. Any new optional local jurisdictions that are created and in which you are registered must be added manually. AvaTax only applies tax for transactions in these jurisdictions.
      • Find local jurisdictions for a state based on a company address using the jurisdiction finder.
    • All
      • AvaTax selects and maintains all optional local jurisdictions. Any new optional local jurisdictions are added automatically. AvaTax applies tax for transactions in all local jurisdictions.
  4. If you choose Selective, the page will reload and a list of county, city, and special tax jurisdictions displays. Select all jurisdictions in which you wish to register.
  5. Change the Begin Date or End Date as needed. For more information, see the Jurisdiction begin dates and end dates section above.
  6. Click Save.

Use the jurisdiction finder

The jurisdiction finder provides a straight-forward way to identify local jurisdictions using a company address.

To use the jurisdiction finder:

  1. On the Local Jurisdictions page, select Selective. The jurisdiction finder becomes active.
  2. Click Jurisdiction Finder.
  3. Select the Type of address for the jurisdiction finder.
  4. Enter the required information based on the Type you selected.
  5. Click Next.
  6. AvaTax selects the tax region for this address or ZIP Code.
    • If the tax region is applicable to your business, click Save & Finish to add the jurisdiction(s) and exit the jurisdiction finder or, if you would like to search for another jurisdiction, Save & Add More. (No jurisdictions are officially added until you click Save & Finish.)
    • If the tax region is not applicable:
    1. Click View and select Neighboring Tax Regions.
    2. Choose a neighboring tax region to update the list of jurisdictions, and then select the jurisdictions desired (County, City, or Special tax jurisdictions).
    3. Change the Begin Date or End Date for each jurisdiction as needed.
    4. Click Save & Finish to add the jurisdiction(s) and exit the jurisdiction finder or, if you would like to search for another jurisdiction, Save & Add More. (No jurisdictions are officially added until you click Save & Finish.)

Next steps

You're finished with your initial settings in AvaTax. Now install and configure AvaTax for your accounting software. If you're not connecting your accounting software to AvaTax, import your transactions into AvaTax. If you're developing an API, start with our workflow and best practices.