Add a company
When you start using AvaTax Update, you set up a company. A company in AvaTax Update is a model of your business from a sales tax and consumer use tax perspective. If you have a multi-company organization, add the additional companies. Add the parent company first, if your organization has parent company/child company relationships.
Go to Settings > Manage Companies and then, click Add a Company.
Gather information before setting up your business
Take steps ahead of time to make the setup process as quick and accurate as possible by gathering information about your business before starting, so you don't have to interrupt the setup process to look anything up. At the very least, you should know your taxpayer ID number, any business ID numbers associated with your company by non-U.S. governments, and the address of your business.
Fill out your company information
Add your company information and specify if the company is a stand-alone company or a child company.
The Taxpayer ID Number (TIN) is also known as a business tax identification number. It's a 9-digit code used by US companies for tax reporting.
The Business ID Number (BIN) is a business identification number, such as the Canadian BIN or European VAT identification number, assigned to a non-U.S. company. It's not required.
The Company Code links your accounting software to AvaTax Update. If your accounting software defines a company code, enter that company code as part of your company information.
Standalone Company?
- If this company has a parent company, check the Standalone Company box and then type the name of the parent company
- If the company doesn't have a parent company, continue to the next step of creating the company
- Inherit the Tax Collection Settings? The tax collection settings are the collection of jurisdictions, tax codes, tax rules, and items that define the taxing policy of a company. Check the box to allow the child company to inherit the tax collection settings from its parent company.
- Does this company file returns on its own? A separate reporting entity
is a company that reports and files its transaction history independent from any parent company or child company with which it’s associated. Check the box to allow the child company to maintain its transaction history independent of its parent company.
Tell us where you collect tax
We use your address to set up your company's first collection authority. Add the regions and local authorities where you collect and remit tax. This is how AvaTax Update knows where and when to calculate tax for your company. It's important to register with the collection authorities in each location to avoid compliance issues down the road.
What if I'm not sure?
Contact Avalara Professional Services, an accountant, a tax attorney, or other qualified tax professional to conduct a nexus jurisdictions analysis. Nexus determines if your business is obligated to collect and remit sales tax in a particular region.
How does AvaTax Update use this information?
For companies conducting business in the US, AvaTax Update assumes:
- Transactions in regions where you've told AvaTax Update you collect tax are taxable according to the taxability rules for that collection authority
- Transactions in other regions are non-taxable (and thus receive a 0.00% tax calculation)
For companies conducting business globally, the country in which the transaction takes place is the one AvaTax Update uses for tax calculation. Other factors affecting the AvaTax Update tax calculation are the type of good sold, whether that good is taxable or exempt, and whether it is sold to a business or a consumer.
Add where you collect tax
Your company is set up to collect and remit tax in the region containing your company address. If you collect and remit sales tax in other places, you need to add more regions. If you don't want to do this now, you can do it later under Settings > Where You Collect Tax.
To add additional places where you collect and remit tax:
- Click Add More Regions.
- Select the check box next to the regions where you collect and remit taxes.
- Selecting Canadian provinces and territories turns on the calculation of Canadian Goods and Services Tax (GST) 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.
- Selecting Canadian provinces and territories turns on the calculation of Canadian Goods and Services Tax (GST)
- Click Add These Collection Authorities.
- If you're prompted to add optional local collection authorities, add the local authorities that apply to your business.
- Verify the tax types for each US region and change them, if necessary. If you're not sure right now, do this later under Settings > Where You Collect Tax. You can only change the tax type for regions that have both sales tax and sellers use tax.
- After adding your collection authorities, click Done With Tax Collection.
Add locals
Some regions have optional local collection authorities that aren't included when you select the state. If you select a state with optional local collection authorities, you're prompted to add these authorities from a list or by address. It's important that you select local authorities so that AvaTax Update can accurately process transactions in counties, cities, or special tax jurisdictions within these regions. It also helps ensure taxes are tagged properly for reporting and filling out returns. If you don't collect tax for the local authorities, your customer may be responsible for paying consumer use tax.
Select locals by address
- Click Select Locals by Address.
- Enter the address.
- Click Validate Address.
- A list of applicable collection authorities appears below the address. Click Add Authorities to add these authorities.
- If Tax Type is shown for the region, make sure it's correct. For more information, see about tax types.
- Change the Begin Date or End Date for any of the collection authorities, if you need to. Click the pencil icon next to an authority to change the dates.
- Click Done With Region.
Select locals from a list
- Click Select Locals From List.
- A list of local collection authorities for the state appears. Select the check box next to each local collection authority where you're registered to collect and remit tax.
- Click Add These Collection Authorities.
- If Tax Type is shown for the region, make sure it's correct. For more information, see about tax types.
- Change the Begin Date or End Date for any of the collection authorities, if you need to. Click the pencil icon next to an authority to change the dates.
- Click Done With Region.
What does Automatically Update Authorities do?
If you select all of the optional local collection authorities for a region, you get the option for AvaTax Update to automatically update your authorities. Leave Automatically Update Authorities set to On to have AvaTax Update maintain all optional local collection authorities. AvaTax Update updates your local authorities for any boundary adjustments or new optional locals that are added to this region. AvaTax Update applies tax to transactions in all local collection authorities. If this option is on, it's important to register with all of the local collection authorities to avoid compliance issues.
Set Automatically Update Authorities to Off to maintain the optional local collection authorities yourself. AvaTax Update only applies tax to transactions in the local collection authorities you select. You update your selections, if necessary, when there are boundary adjustments or new optional locals added.
Turn this option off to edit or remove any local collection authorities for the region.
What if I don't need to add local collection authorities?
If you don't add local collection authorities, you'll only collect tax at the state level. If necessary, add local collection authorities later under Settings > Where You Collect Tax. To collect tax in Alaska, you must add local collection authorities.
If you don't need to add local collection authorities:
- Click I Don't Need to Add Locals.
- Click Add These Collection Authorities.
Add non-US countries to collect for VAT / GST or customs duty
If you have business outside of the US, AvaTax can calculate VAT / GST or customs duty for sales into certain countries. Before you select additional countries, review how AvaTax Update handles distance sale thresholds and place of supply settings.
Select non-US countries
- Check the box beside any country where you do business, and then click Add Selected Countries.
- Click the VAT / GST or Customs Duty tabs to see the countries you've added.
- Click Add a region where you collect to add more countries.
- Click Add a Tax ID beside a country to modify its Tax ID or place of supply settings. Click Done with (Country Name) to finish.
Add a Tax ID and Expiration Date for each country you add, or do it later under Settings > Where You Collect Tax.
Add locations to collect lodging, bottle, or other special taxes
AvaTax Update can also calculate for lodging, bottle, electronic waste, bike, and checkout bag taxes. Speak with your Customer Account Manager (CAM) about setting up AvaTax Update to calculate these other tax types.
If you don't want to do this during your initial setup, you can do it later under Settings > Where You Collect Tax.
Activate your company
On the Activate page, click Activate company. A company must be active for AvaTax Update to process transactions.
Connect your company to AvaTax Update
If you haven't already connected your accounting software with AvaTax Update, click Get Your Connector Now. This will open Avalara Account in a new tab. See Find Your Integration to learn how to install and configure your connector. If you don't have an integration, import your transactions into AvaTax Update. If you're developing an API, start with our workflow and best practices.