Lookup – Avalara and Xero team up to make your sales tax less taxing with Sales Tax Lookup!

Lookup – Avalara and Xero team up to make your sales tax less taxing with Sales Tax Lookup!

This is a brand new feature in Xero so they do not have a video out on it yet, and I found their help section on the topic, not as helpful as it could be and some of my clients were having issues in using the feature so I thought I would do a write up about my experience in using it.

First you must turn on the Sales Tax Lookup.  According to the instructions, you can do this in one of two ways, either directly on an invoice or going into Settings>General Settings and under Organization go to Tax Rates (I turned on Lookup though the latter option and did not test the turning it on in an invoice).  Under Sales Tax Lookup, click on edit and check the box next to Use sales tax lookup and put in your physical address of your business or where you ship products from and what state(s) your business has a PHYSICAL address.  You can enter multiple states here, which is really important because that will determine if you need to charge sales tax (I must state that I am not a sales tax expert, that is why I love this new feature, but I believe if you have Nexus or a physical presence in that state, then you need to charge sales tax).  You then have to check the box next to I have read and agree to the Terms of Use.  You are now ready to use Sales Tax Lookup!

Before I go into how to actually use the Sales Tax Lookup, I should give you more info regarding entering your physical address or the physical address of whomever you are shipping items to;  physical addresses cannot be a PO Box and it has to be exactly like USPS has it listed. For example, I normally type out my street name as W. Twelve Mile Rd. If I do that the address comes up as Unknown. If I change the Twelve to 12, it then comes up.  You cannot really copy and paste an address into the search bar because if it is not EXACTLY as it is listed with USPS, then it will come back as UNKNOWN. I also found that if I cannot find it in the Sales Tax Lookup, I can go to USPS.com and do an address search because it will bring up other options to choose from if there are other or multiple options.  Then once I have found the correct way that they want the address, I can then go back into the Sales Tax lookup.  So I recommend if you cannot seem to find the address within the Sales Tax Lookup to first find it out on USPS.com.

Turning on Sales Tax Lookup in Xero

Now how to actually use Sales Tax Lookup:

In this example, I am going to sell some software to Xero (I wish) so I create and invoice for them as usual.  When I get to the Tax Rate, I hit the down arrow and choose Look up rate.

Using Sales Tax Lookup in a Xero Invoice

Now a box comes up asking you to enter the physical address of the business that you are shipping to.  I did get asked why Xero asks you for the address if you have the address already in Xero.  And the answer to this client was that he had an address entered but not a PHYSICAL address – two different things.

Physical Address of Customer in Sales Tax Lookup

So if I look up Xero in my contacts, I will see that their physical address is blank.  This is where the Sales Tax Lookup pulls the address from.

Contact information in Xero

You will see when I started typing in their information, I got a few different options which are different from the way I have the address listed in Postal Address section.  I choose the FL 5 option and clicked Save.

Locating physical address in Xero

Once I clicked Save, the correct tax rate that I need to charge them is automatically entered into the invoice, I do not have to set up the rates ahead of time, it is automatically set up for you.

Sales Tax automatically entered in Xero Invoice

When I hit the Save button, it actually saved the PHYSICAL address within the contact information for Xero AND the next time I sell Xero some software, I only have to hit the Look up button and it will pull the physical address from the Physical Address section of the contact information.  So you only have to set up your clients once and it is in there for next time.

Customer physical address added in Contact Information in Xero

I hope that you found this helpful and that you find that using this new feature will also make your sales tax less taxing!

Dailey Bookkeeping Services is a Xero Certified Silver Partner so if we can help you with Xero, just give us a call, we would love to help you!  The owner, Jacqueline Dailey is a Certified Public Bookkeeper, and a Xero Certified Silver Partner. We work remotely so we can work with any company located in the U.S. If we can help you with this process or provide you with custom reporting, please give us a call. If we cannot help you, we will refer you to someone who can!  Feel free to visit our website at http://www.daileybookkeeping.com.

 

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