“NetSuite Tutorial: How Does Taxation Work in NetSuite, and When Should You Integrate with Avalara?
There are two things that you can’t avoid in life: death and taxes.
Like most individuals around the world, companies are required to pay taxes on a quarterly basis, so it makes sense for a company to have an effective and efficient way to track everything related to taxation.
For companies using NetSuite, there are native functions capable of helping users generate tax rates during invoicing, as well as quarterly tax reports for payments.
Business Requirements
Before you implement your taxation structure in NetSuite, you need to understand your sales region.
Following the recent Wayfair trial in 2018, state governments can mandate businesses to pay sales tax (with either 200 plus transactions or $100,000), even if the business doesn’t have a physical office or warehouse in the state.
NetSuite makes this easy by allowing users to easily create a saved search, categorizing their customers’ countries and states. Regardless of amount, this is OdeCloud’s recommended approach.
When you are ready, you can start setting up your company’s nexus by going to the following directory: Setup → Accounting → Nexus → New
Once your nexus is completed, you should be able to see a list of tax codes (Setup → Accounting → Taxes → Tax Codes).
You should be able to select these tax codes from your invoice (see below).
Once you’ve defined your nexus, you’re ready to implement taxes in NetSuite!
Maintenance
With Wayfair, calculating sales tax can be tricky considering users will need to constantly monitor his or her nexus, as well as manually update related tax rates.
You also need to have a tax professional available to help inform your administrator whenever there’s an update.
OdeCloud’s Recommended Practices
To overcome these hurdles, I would suggest tax engines like Avalara or TaxJar to assist you with these updates and tax filing.
These tax engines will help you to monitor tax updates, syncing them into your NetSuite when necessary. It will also help you consolidate reports, as well as send payments to your respective state tax agency.
Connect with NetSuite expert Jacky Wong on OdeCloud to learn more!