WooCommerce Integration

WooCommerce is an e-commerce platform built for WordPress that powers over four million online storefronts. While many online sellers have storefronts powered by WooCommerce, the plugin does not automatically collect sales tax on purchases and remit it to the states. Why? Because WooCommerce is not a marketplace facilitator like Amazon.

This makes sales tax compliance even more essential for WooCommerce sellers, as they’ll need to know when to charge it, how much to charge, when to collect it, and where to remit it. State sales tax varies by state, which is why you should consider a sales tax management solution like Zamp to help.

This article will explore the ins and outs of WooCommerce integrations and what you need to know to stay sales tax compliant.

Sales Tax for WooCommerce Sellers

WooCommerce is an e-commerce plugin that lets you build a new online store or move your existing store. Businesses can sell anything from products to bundles and digital good downloads. There’s also the option to add extensions to sell subscriptions and take bookings.

While selling online has given businesses more opportunities, it has also created more rules and regulations around sales tax. Businesses are generally required to collect sales tax if they have a physical presence in a state or exceed a certain transaction or revenue threshold (called economic nexus). Of course, each state has its own sales tax laws, which can vary from place to place.

Some businesses try to handle sales tax themselves. But when you sell across several states and tax jurisdictions, it can quickly become complicated.

Does WooCommerce Collect Sales Tax?

WooCommerce does not automatically collect sales tax for your online store. You’ll have to manually set the tax classes and rates and apply them to your products. In addition, WooCommerce won’t remit sales tax on your behalf. The platform is not a marketplace facilitator and, therefore, does not need to charge sales tax on purchases automatically.

How Sales Tax Works for Your WooCommerce Store

In the US, failing to file sales tax returns for your business can lead to audits and even hefty penalties, potentially setting you back and harming your company. It’s vital for you to know how sales tax works for your storefront so you know when to collect, remit, and file sales tax returns for any WooCommerce orders you sell.

Sales Tax Nexus and Your Business

Sales tax nexus occurs when you have a sufficient physical or economic connection to a state or locality that requires you to collect and remit sales tax in that state or jurisdiction. The two most common ways to establish nexus are through:

• Physical nexus: This occurs when your business has a physical presence, such as a studio, home, warehouse, etc. in a state.
• Economic nexus: This is very common for online sellers and is triggered when you meet the thresholds for sales activity in a state. While each state sets its own tax rules for economic nexus, it usually revolves around sales or transaction numbers.

For WooCommerce store owners, determining where you have nexus will guide your compliance strategy.

Sales Tax Thresholds

As mentioned above, each state usually sets thresholds for economic nexus. Some states may have a dollar amount that triggers nexus and when you have to charge sales tax, while others might look at the number of sales transactions.

Keeping up with sales tax laws can be challenging, which is why online businesses need to remain compliant. This includes monitoring for updates and ensuring your systems function properly for tax collection.

Determining Which Products to Charge Sales Tax On

Along with determining nexus, you’ll have to research which products to collect sales tax on. Each state has a list of taxable goods, and depending on the state and product category, some items may be exempt.

In most states, food, clothing, and textbooks are exempt from sales tax. Staying on top of sales tax exemption management is a crucial component to keeping your sales taxes in order.

How to Set Up Sales Tax in WooCommerce

WooCommerce sellers can either manually set up and implement their sales tax settings or use an automated sales tax solution that integrates with the platform. A tax solution can provide real-time sales tax calculations, transaction reporting, tax exemption management, and product-specific tax code assignment.

In the section below, we’ll discuss how you can set up Zamp for your WooCommerce storefront.

How to Install and Setup Zamp for WooCommerce Storefronts

Before you begin installation, you’ll need to ensure that you have access to WordPress 5.0+, WooCommerce 7.0+, have a valid Zamp API token, and PHP 7.4+.

If you aren’t sure how to verify your WordPress, WooCommerce, and PHP versions, you can visit WooCommerce → Status. You can then search for the following:

• For WordPress, look under the WordPress environment for a value called WordPress version
• For WooCommerce, look under Active plugins for a value called WooCommerce
• For PHP, look under Server environment for a value called PHP version

To get started with the installation, you’ll first need to log in to your WordPress admin dashboard. You’ll then:

1. [Release install] Navigate to Plugins > Search for "Zamp Tax"
2. [Manual install] Navigate to Plugins > Add New
3. [Manual install] Click Upload Plugin
4. [Manual install] Select the Zamp Tax plugin ZIP file
5. Click Install Now
6. Click Activate Plugin

Initial Configuration

For the initial configuration, head to WooCommerce > Settings > Zamp Tax. You’ll then enter your Zamp API token, which will show as “Connected” when valid.

Following this, save your settings to have the token validated and unlock additional settings. , You’ll then select your nexus states, which are states where you have tax obligations and only the tax-applicable states will be shown.

Feature Configuration

You’ll also want to:

• Enable Calculations: Automatic checkout sales tax calculation
• Send Transactions: Tax reporting data transmission
• Enable Address Validation: Shipping address verification

Sales Tax Compliance Practices for WooCommerce Sellers

As demonstrated above, staying up to date with sales tax rates can be challenging. You not only have to keep track of what changes but make sure you implement the changes if you are handling everything yourself. Here are some best practices to stay sales tax compliant as a WooCommerce seller:

Streamlining Sales Tax Filing Processes

As an online seller, here are some things you can do to improve your workflow to streamline sales tax filing processes and reduce errors:

WooCommerce Sales Tax: Conclusion

Using WooCommerce as a storefront can be exciting, especially when using an API that directly integrates with the best sales tax software. This software helps ensure sales tax compliance and takes the stress out of managing sales tax daily so you can focus on growing your business.

Ready to learn more about our new WooCommerce integration and sales tax software? Click the button below to book a call with an expert on our team.