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Home>Online Taxes

Manage Sales Tax Settings for Square Online

Taxes for online sales can be confusing, especially if you receive orders from various locations. With Square Online, setting up and managing your online tax settings has never been easier.

The amount of sales tax charged on an online purchase is determined by applying the tax rate to the total price of taxable items in an order. Depending on business needs, you can include tax in the item price, charge tax on shipping and delivery fees, and use item-level tax rates for pickup, local delivery, and self-serve orders.

Note: Tax settings from your Square account do not sync to Square Online.

Learn more about other Square Online settings beyond taxes.

Create US Tax Rates

About the automatic US tax calculator

The automatic tax calculator will charge US sales tax based on:

  • all tax registrations you’ve added to your Square account, and
  • where you fulfill an order.

A tax registration state is one where you have a business presence. This could be your storefront, home office, warehouse, or a ship-from location. When charging taxes, let’s say your physical store is in California, but you ship orders from a location in Arizona. The automatic tax calculator will add rates for both California and Arizona since you have a business presence in both of these states. If you sell and ship from just California (i.e. the same state), then you’ll only charge tax for orders going to California.

The most important thing to remember about US taxes is that you only need to collect them if you have a business presence in the state that you’re shipping an order to. If you don’t, you don’t collect taxes.

Note: When a customer has different billing and shipping addresses, only the shipping address matters in terms of charging tax. For orders that’ll be picked up or locally delivered to the customer, local sales tax will be added accordingly.

Add tax registrations

For accurate tax calculation on shipping and other distance orders placed on your Square Online site, you must first review your tax registrations in your Square account.

We’ve preconfigured your tax registrations based on your Square locations and Square Online tax locations, but you can always add more. To add a new tax registration:

  1. From your Account & Settings page, go to Business information > Sales Taxes.
  2. Under Tax Registrations, select Manage.
  3. Toggle on each state where you have a tax registration.
  4. Select Add tax registration to add a new state.
  5. Select Save when finished.

Note: If you create a new Point of Sale location in a specific state, that state will automatically appear under your Tax Registrations.

Calculate US sales tax automatically

After setting up your tax registrations, you can use the automatic tax calculator. To automatically calculate US taxes for Square Online:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Select Add tax rate.
  3. In the dropdown menu, select United States.
  4. Check Automatically calculate taxes.
  5. Select Save when finished.

Calculate US sales tax manually

If you don’t want to use the automatic tax calculator, you can always set up your US taxes manually. To manually calculate US taxes for Square Online:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Select Add tax rate if you don’t already have a US rate, or select Edit under United States.
  3. Make sure the box for Automatically calculate taxes is unchecked.
  4. Optionally add local rates.
  5. Select Save when finished.

Create Canadian Tax Rates

About Canadian taxes

If you’re located in and ship to Canada, the Canadian country tax rate is prepopulated along with any additional, compound, or replacement taxes charged by the destination province or territory. For example, if an order is shipping to British Columbia, an extra 7% is added to the country’s 5% tax rate. You can edit and override any of the preset Canadian tax rates but they cannot be deleted.

Create Canadian tax rates

To manually calculate Canadian taxes for Square Online:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Select Add tax rate.
  3. In the dropdown menu, select Canada.
  4. Adjust the country tax rate by entering a new amount in the Country Tax Rate field.
  5. Select Edit for any province or territory that you want to manually add a tax rate for.
  6. Select Save when finished.

Create Tax Rates for Other Countries

Taxes for most countries (except the US and Canada) are charged at the country level only, and must be created manually. The tax rates should be configured based on where the buyer of the goods or services is located.

To create tax rates for other countries:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.

  2. Select Add tax rate.

  3. Select a country from the dropdown menu and enter the Country Tax Rate. 

  4. Add a name for the tax rate. This will be shown to your customers.

  5. Select Save when finished.

Configure Other Tax Settings

Non-taxable items

To exempt an item from taxes in Square Online:

  1. From your Square Online Overview page, go to Items > Site Items.
  2. Select an item from your list.
  3. In the Fulfillment section, check the box to indicate No taxes apply when selling this item via Square Online or Point of Sale.
  4. Select Save when finished.

You can also update this setting for multiple items at once using the bulk editing method in Square Online, or for individual items directly from your Square Item Library.

Note: If an item is set as non-taxable, taxes won’t be auto applied to the item on any orders across Square Online or Square Point of Sale. Make sure you’ve selected only items that aren’t subject to sales tax. For example, in some places, items considered necessities are not taxed. When in doubt, consult a tax advisor.

Include tax in item prices

When sales tax is included in item prices, it’s displayed on order receipts as a separate line item (for illustrative purposes), but isn’t added to the total price. To include tax in item prices:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Under “Order level tax settings,” check that Taxes are included in item prices.

When customers purchase an item with tax included in the price, they’ll see the following on their order receipt:

  • Subtotal: Represents the sum price of all items in the order and includes any price inclusive taxes.
  • Tax: Breaks out the taxes from the subtotal to show customers the exact tax amount paid.
  • Total: The total cost of the order, including the subtotal and any additional fees (such as shipping fees) that are applied.

Charge tax on shipping or local delivery fees

Rules for charging sales tax on shipping and delivery fees vary. If you’re not sure what’s required, you should consult with a professional. To charge sales tax on shipping or local delivery fees:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Under “Order level tax settings,” check the boxes to Charge taxes on shipping rates or Charge taxes on delivery fees.

Item level taxes

Order level tax rates are applied to online orders by default, but you can choose to override them by applying item level tax rates for pickup, delivery, and self-serve orders. These are the same tax rates used for Point of Sale purchases. To turn on item level taxes for Square Online:

  1. From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
  2. Under “Item level tax rates,” toggle on any of the item level taxes for pickup, delivery, or self-serve orders. 
  3. Select Manage item level taxes to view item level taxes from your Account & Settings page.

Customers who receive an item level tax rate on an order can view a calculation of their taxes during checkout (displayed by tax name). If a customer selects pickup, local delivery, or self-serve ordering for an item that doesn’t have an item level tax rate, no tax will be applied to the purchase.

Note: Dine-in tax rules aren’t applied to online orders.

Troubleshooting

If you don't see your tax settings appear on your Square Online site, there are a few things to consider that could be the cause:

  • Taxes are included in your item prices: Be sure the Taxes are included in item prices option isn't checked if you don't want them included.

  • Items are marked as tax exempt: Update multiple items at once for sales taxes using the bulk editing method.

  • The website hasn't been republished: Any time you update tax settings, a good practice is to republish your website from the Square Online site editor.


DISCLAIMER: Although we’ve built a powerful tax calculation system for Square, Square cannot offer any tax advice or consultation services. Tax compliance is your responsibility. We do not guarantee the applicability or accuracy of our tax tools. If you have any questions about your tax obligations, consider consulting a professional tax advisor.