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Set up AvaTax Connector for Stripe Invoicing for your tax calculation needs

We’ve outlined the steps for you to connect and manage AvaTax Connector for Stripe Invoicing to get started.  

Before you begin 

  • You have purchased AvaTax for Stripe Invoicing. To purchase, select Get integration on the Stripe Invoicing page.

  • You’ve created at least one company in Avalara. 

Step 1: Connect Stripe Invoicing and AvaTax

Avalara AvaTax for Stripe Invoicing is a web application; hence, you do not need to download or install it. You can simply connect Stripe Invoicing to AvaTax. 

Connect one or more companies created in your AvaTax account to your Stripe Invoicing account. 

Before you begin 

  • You must have created a company in your Avalara account. 

Steps

  1. Sign in to AvaTax for Stripe if you are not signed in already.
    Avatax_for_stripe.png

    clipboard_e2eae8147c091ea2dd4ed0b1209198ae3.png 

    Note

    If you want to use test data, log in to https://sandbox.avataxforstripe.com/signin

  2. In Avalara, go to the Setup page. (This is the default page that appears after you sign in as a new user.)
  3. From the Select Company drop-down list, select one company and click Link Company.
    select_company.png
  4. On the Setup page, enter the origin address of your business for tax calculation.
    setup_address.png
  5. Click Save to open Link your AvaTax and Stripe account.
  6. Beside Webhook link for Stripe integration, copy the link.
    Copy_webhook.png
  7. Go to your Stripe Invoicing dashboard, and then click the following text to switch to the environment you want to connect to AvaTax if you're not already there:
    • If View test data displays, you're in the production environment.

    • If Viewing test data displays, you're in the test environment.

  8. Go to Developers > Webhooks, and then click Add endpoint.
    AddEndpoint.png
  9. On the Listen to Stripe events page, under Endpoint URL, paste the webhook link you copied.
    Add_endpoint_url.png
  10. Click + Select events to open the events list. 
    Select Events.png
  11. Filter the AvaTax-supported events:
    selecteventstosend.png
    • Invoice.created
    • Invoice.updated
    • invoice.marked_uncollectible
    • Customer.created
    • Customer.updated
    • Charge.refunded
    • Charge.succeeded
  12. Click Add events > Add endpoint to complete webhook configuration and exit. 
  13. On the Stripe dashboard, select the webhook endpoint created for AvaTax, and then click Reveal under Signing secret to reveal the Signing secret.
    reveal_secret.png
  14. Copy the revealed signing secret, and paste it in the Webhook signing secret text box on the AvaTax for Stripe page.
    copy secret.png
  15. Click Save Configuration to connect AvaTax to Stripe Invoicing.

Step 2: Configure Avalara AvaTax for Stripe Invoicing 

After you activate AvaTax and set up your company profile, install and configure the connector for your business application. During configuration, customize your setup to fit your unique business needs for things, such as: 

  • Tax calculation settings for various tax types 

  • Exemption settings if you have exempt customers 

  • Product taxability settings  

If you want tax to display within Stripe Checkout, integrate with the Avalara API

Before you begin

To make sure that the sales tax is calculated for subscriptions, set the "pay_immediately=false” flag. This prevents Stripe Invoicing from paying the invoice for an hour (approx.) after your subscription is created, and AvaTax for Stripe Invoicing can update the first recurring invoice within this time frame. Contact Stripe Invoicing Support to have them add your account with this argument to their allow list. Only accounts that are on the allow list can use this argument. 

Steps

  1. Go to the AvaTax for Stripe Setup page. (This is the default page that appears when you sign in as an existing user.)
    The Setup page displays the available information as saved in AvaTax.
  2. At the bottom of the Setup page, click Edit Configuration to make the desirable updates.
    settings_edit_config.png
  3. Take the following actions in the given fields; a field followed by an asterisk sign (*) is mandatory.
    Field Action  
    Webhook signing secret  Enter the webhook signing secret.
    Company Code* Select the company whose information you want to use when calculating tax.
    Origin address details Enter the address to be used as your ship-in address when calculating sales tax.
    Do you sell tax-inclusive products?
    • Yes: If the selling price of your product is inclusive of tax, select Yes.
      AvaTax will separate the product price and the applicable tax to display on the invoice.
    • No: If the selling price of your product is exclusive of tax, select No.
      AvaTax will calculate the sales tax on the product price and will display the same on the invoice.

    Exclude zero value transactions for tax calculation?
    • Yes: If you select Yes, zero-value transactions will not be sent to AvaTax.
    • No:  If you select No, all transactions will be sent to AvaTax.
    Calculate tax on

    Select either or both options.

    • To calculate tax on charges, select Charge/Payment.
    • To calculate tax on invoices, select Invoice.
    Tax on Invoices

    Choose a type of invoice for calculating tax:

    • Recurring: Tax is applied on recurring invoices.
    • One-time: Tax is applied on normal invoices.
    AvaTax Integration Status Enable this to use AvaTax to calculate taxes.
    Validate Address
    • If you do not want this feature, leave the check box clear.
    • If you want to avail this feature, select the check box and then click Validate.
      ValidateAddress.png


      The Not Attempted text next to the Validate button changes to Success followed by the validation timestamp.
    Tax label on Invoice* Enter text to display on the invoice tax line for AvaTax.
    Tax label on Charge Enter text to display on the charge description for AvaTax.
  4. Click Save Configuration to exit.

A confirmation message appears at the top of the page stating that configuration settings are saved successfully.

Step 3: Understanding Stripe Metadata

In order to calculate sales tax, Connector for Stripe Invoicing requires invoice details, origin address (ship-from), destination address (ship-to), and other parameters, such as Tax Inclusive/Exclusive preferences, item codes, etc.

The origin address is retrieved from your merchant AvaTax configuration. For the destination address, Connector for Stripe Invoicing relies on the invoice metadata.

In Stripe Invoicing, metadata can be stored with various objects, such as charge, invoice items, and customers, in key-value pair format. Connector for Stripe Invoicing identifies invoice metadata from specific key-value pairs. If it doesn’t find the required metadata information, no tax calculation happens and an error is logged for that invoice. Learn more.
 

Step 4: Send a test transaction from your business application

After you connect your application to AvaTax, send a few test transactions to make sure the connection is working and to verify different business scenarios and workflows.

  1. In your business application, create and commit a transaction or an invoice.
    The transaction must be committed for AvaTax to calculate tax. If your application allows it, add a prefix to the document code on the test transaction so you can easily identify the transaction and void it later on. 

    Tip icon

    Tip

    We recommend testing common workflows and billing scenarios including quotes, return invoices, or credit memos.

    Here are some things you might want to include in a test transaction:

    • Addresses in jurisdictions where you collect and pay tax
    • Products and services mapped to Avalara tax codes
    • Shipping fees included in a freight line
    • Tax-exempt customers, if any
  2. Once the transaction is posted to AvaTax, sign in to AvaTax and go to Transactions to review the transaction. If the test transaction doesn't show up in AvaTax or look as you expect, try these things:
    • Make sure the account ID, license key, and company code in AvaTax match the ID, key, and code in your business application.
    • Create another test transaction and turn off any plugins or customizations to your business application. Sometimes these additions interfere with the connection to AvaTax.
  3. Change your settings as needed.
  4. Once you're satisfied with the AvaTax results, void the transaction in your business application and in AvaTax to make sure it isn't included in your tax returns.

Frequently asked questions

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