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Accurately calculating sales tax, VAT, and GST on your sales is crucial to keep your reputation and customer trust intact and avoid penalties. That requires regular tax audits and reviews, keeping up with local tax laws where you do business, consulting with tax experts, and tax solutions that help you stay organized.
We asked Squarespace experts on our Product and Product Support teams to answer some frequently asked questions about managing sales taxes. Here’s how automated tax and other Squarespace features help you with tax calculation by simplifying your tax management, improving your accuracy, and increasing your efficiency.
Note: This article is available as a resource but shouldn’t be construed or relied upon as tax or legal advice. Refer to local regulations and a financial or tax professional to understand your obligations.
How does Squarespace help me with tax compliance?
Squarespace helps you calculate and collect taxes for sales in over 100 countries. That takes the guesswork off of your plate as the global marketplace changes. Squarespace automated tax is built into the platform, so you won’t need to connect to a third-party. Use it for anything you sell, in any format, from physical goods to services to digital products and invoices.
Additionally, you can export your accounting data, which you can use in your accounting software for advanced bookkeeping, or generate regular reports that help you understand how much tax you’ve charged and if it’s enough.
Customer notification email footers support rich text editing. You can add your business information, VAT ID, ABN, or other relevant tax registration number on your order confirmation emails to meet expectations for your locale’s compliance needs.
Remember, Squarespace can’t provide tax or legal advice. We recommend you consult with a professional to understand your tax requirements.
Can I customize tax rules by product?
Yes, Squarespace offers product-specific taxation, giving you the ability to charge different taxes for different products. You can set specific product tax codes for physical products, services, downloads, content and memberships, and invoicing. You can even use a nontaxable product tax code to make certain products tax exempt.
Can I charge recurring payments with a specific setup cost and tax rate?
Product-specific taxation allows you to set up taxes on your content and memberships pricing plans, which often have a recurring cost. Squarespace also currently offers the ability to create subscription products, which have a set price-per-renewal frequency. That means that the initial set cost and recurring payment are the same by default.
However, it’s important to know that the tax rate for subscriptions can’t be changed. So, when a customer purchases a subscription at a specific tax rate, they’ll be charged at that rate for the remainder of their subscription. Any changes you make to automated or manual tax rules may only apply to customers who subscribe after those changes are made.
What is the customer experience like with Squarespace automated tax?
For customers buying from your business, tax is automatically calculated at checkout based on:
Your business address
Your customer’s shipping or billing address
Where you’re registered with Squarespace to collect tax
The product tax codes you’ve set
The tax rules for that registered location and product tax codes
You can customize how tax is added and displayed to your customers, either included in each item’s listed price or added at checkout.
Note that Squarespace can only collect taxes in a location after you’ve added that registration to your tax settings. Without this, your customer won’t be charged any taxes, even if you’re registered with that tax authority.
How does Squarespace help me sell in countries other than my country of residence?
Squarespace automated tax also includes support for tax collection methods in different regions, such as state sales tax, GST, VAT, and provincial tax registration types. For businesses in or selling into the European Union, we also support Union One-Stop Shop, Non-Union One-Stop Shop, and Import One-Stop Shop.
Once you and your tax expert determine where you want to collect taxes and establish the necessary registrations, you can add those registrations in your automated taxes settings. Squarespace will then charge the current tax rate based on that location and product tax code during checkout, so you can be confident that you’re charging the accurate amount of tax.
In addition to tax support, there are several other tools to help Squarespace users sell internationally, including shipping, translation, and payment features.
Do I need to know what tax rate to charge and manually input the tax rates and rules for my products?
The answer to this depends on whether you’re using manual taxes or automated tax on Squarespace. Different countries and states have different tax rates for different types of products and services. The rules are also different for consumers and businesses.
When using the manual tax solution, you need to manually enter tax rates for each country you want to collect tax in. This option does not support different tax rates for different products.
With Squarespace automated tax, you can get accurate tax rates for any locations you’ve registered to collect taxes in. You don’t have to keep up with and manually calculate tax rates, since the feature will calculate them for you.
The system factors in your site setup, including business address, product tax codes (default, or assigned to individual products), where you’ve told us you’re registered to collect tax, and the customer’s address to determine the appropriate tax rate to apply.
Remember, every business is different, and tax laws vary by location. You’re responsible for ensuring your business collects, files, and pays the correct taxes. We recommend working with a professional tax advisor for specific guidance about your business and to understand your tax obligations.
How should I display product and service pricing on my website?
In some locations, like much of the E.U., Australia, New Zealand, and Japan, tax-inclusive prices are expected or required. In other countries, like the United States and Canada, taxes are typically displayed at checkout. We recommend consulting a tax expert to understand any requirements for displaying taxes and decide whether you’ll include them on product pages.
Squarespace supports whichever option you need in your online store. Choose tax-inclusive pricing to include tax in a product’s listed price. Alternatively, you can choose to show pricing exclusive of tax, and then have the applicable taxes added at checkout.
Does Squarespace Invoicing automatically generate the correct tax rates for each country and what I’m selling?
Yes, if you’re using automated taxes. First, you’ll need to set up automated taxes and registrations for any locations in which you want to collect taxes. Once that’s set up, make sure to check the box beside Add applicable taxes to item at checkout when you create an invoice. You can then choose a specific product tax code, or leave the field blank to use your site-wide default product tax code.
Squarespace will calculate the sales tax at checkout based on your business and customer’s billing address, where you’ve told us you’re registered to collect tax, and the product tax code. You can follow more in-depth steps in this guide for sending an invoice.