Avalara User guide

Nicolas Audet
Nicolas Audet
  • Updated

Overview

Avalara software helps automate all of your tax compliance directly within gaiia to ensure that you are always charging the right amount of tax and provides comprehensive reporting for tax reconciliation and compliance. With gaiia’s integration tax compliance and reporting becomes a breeze.

Check out Avalara in greater detail here: https://www.avalara.com/us/en/index.html

The goal of this document is to provide a detailed overview of gaiia’s integration with Avalara as well as all the necessary details on how it works.

Avalara Benefits

While gaiia does offer the capability to calculate and manage taxes, managing the constantly changing tax jurisdictions can quickly become a very involved and manual process. Anytime one of those tax jurisdictions makes a change, it needs to be updated it within your instance so that you stay compliant. As your company grows and expands coverage, it can become a hassle to keep track of everything while remaining compliant, and manual tax compliance can cost your business thousands of dollars in time and effort.

Avalara makes it easy to stay compliant, no matter how big or small your company is. Their platform works on a global scale to keep track of tax rates and taxability rules for millions of products and services in real-time for more than 12,000 tax jurisdictions.

However, calculating taxes correctly is just one part. You are also required to file and remit payments back to the proper jurisdictions by individual deadlines – Avalara handles and automates this part of the process as well.

Getting Started with Avalara

In order to use start using Avalara within gaiia you must first have an account with them. Once done, you can configure gaiia to communicate with gaiia using this account. Please reach out to get started or use the form on their website to get started: https://www.avalara.com/us/en/get-started.html.

Configuring Avalara

This section will cover how to get Avalara setup within gaiia to ensure all necessary details are passed over for correct tax calculation and reporting.

Integration Setup

In order to setup Avalara, the appropriate integration details need to be provided to ensure appropriate information is passed.

To configure the integration, please follow these steps below:

  1. Navigate to the “Integrations” area of the “Admin” module.
  2. Scroll down to the bottom of the page and find “Avalara”.
  3. Click the “Install” button.
  4. You will presented within a set of fields to configure the integration (further details on the field can be found after the images).
  5. Once complete, click the “Connect” button to complete the setup.

Integration_Avalara.png

Avalara integration within the “Integrations” setup area

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Avalara setup area

Integration Field Explanation

  • Enable Avalara → Enable the Avalara integration. This will ensure gaiia communicates with Avalara for all tax calculations. The integration can be configured but this setting OFF if you wish to pre-setup the integration and enable it at a later date.
  • Sandbox Mode → If the integration should be operating in a testing/sandbox mode. This means all transactions (even those on an invoice) will not be recorded when producing tax reports from Avalara. This is useful to enable when troubleshooting or testing. When intending to use Avalara to record taxes, keep this setting OFF.
  • API Username → The API username provided by Avalara so gaiia can communicate with it correctly. This will be the unique API username provided for your account with Avalara.
  • Password → The password used to authenticate your integration into Avalara. This is provided by Avalara, specifically for the account you hold with Avalara.
  • Client ID → Your unique Avalara ID. This will allow them to identify all tax calculation requests and associate them with your account.
  • Client Profile ID → A unique id provided by Avalara. This refers to a tax profile configured within Avalara and critical to calculating tax correctly.
  • Company Identifier → An internal identifier to properly identify tax requests. This can be anything, but we generally recommend using your business name.
  • Business Class → How your business is classified. When unsure, work with Avalara to get the right definition.
    • ILEC → Incumbent Local Exchange Carrier (tier-one providers)
    • CLEC → Competitive Local Exchange Carriers (tier two providers or resellers)
  • Service Class → Specify whether you derive more revenue from primarily local or long distance calls. When in doubt, select “Primary Local” or if it is not directly applicable to you. For further details. consult your Avalara representative.
  • Has Facilities → Are you selling these services over a facilities-based communications network you control? When in doubt, consult your Avalara representative.
  • Is Regulated → Are you subject to regulation by state public utility regulators? When in doubt, consult your Avalara representative.
  • Is Franchise → Are you selling services pursuant to a franchise agreement with municipal authorities? When in doubt, consult your Avalara representative.

At any time, the integration’s connection can be tested by returning to the installed integration and clicking on the “Test Connection” button. After a few moments you will receive a modal indicating the results.

Avalara_test_connection.png

Item Classification

Avalara uses a concept called a “T/S Pair” to classify each item within the product catalogue. Based on this classification, the appropriate tax or taxes can be properly considered when calculating taxes on the items being sold. A “T/S Pair” can be assigned to all types of items in the product catalogue (products, fees & discounts).

Please work with Avalara to determine which “T/S Pair” should be assigned within your product catalogue.

To assign a “T/S Pair” to an item, a “Tax Classification” field has been added when creating a new product/discount/fee or when editing the details of it.

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New “Tax classification” field when creating an item within the product catalogue

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New “Tax classification” field when editing an item within the product catalogue

Please Note: These details are pulled directly from Avalara so upon loading the product catalogue for the first time, there may be a slight delay in displaying this field.

Customer Account Setup

A few additional settings have been added to an account’s billing settings that affect tax calculations in a variety of different ways. This settings only appear when the Avalara integration has been enabled within your gaiia instance.

Tax Exemptions

There may be certain accounts that are exempt from all or a portion of tax that may be charged. The “Tax exemptions” section will allow these exemptions to be configured to ensure Avalara is aware of them and charges or exempts the appropriate amount of tax. It is always extremely important for Avalara to be aware of them to ensure they are recorded correctly for future reporting and compliance from it as well.

To configure a tax exemption, please follow these steps below:

  1. Navigate to the appropriate account and find their billing settings.
  2. Scroll down the page until you find the “Tax exemptions” settings.
  3. Click the “Edit” button within that section. The section will become editable.
  4. Use the “Add tax exemption” button at the bottom of the section to add a new exemption.
  5. Using the “Exemption name” field name the exemption being added. It is generally recommended you use this field to define why the exemption is being done.
  6. Within the “Exemption scope(s)” drop-down, select what “level” of tax(es) being exempted. For example, is it just the local tax collected within the city (”City”) the account resides in or tax across the entire country (”State”).
  7. Use the “Exemption category” to specify the type of taxes the account is exempt from. If the account will be exempt from all taxes, the “All” option can be used.
  8. Repeat this process as many times as necessary.

Account_tax_Exemptions 2.png

View tax exemptions on an account

 

Tax Calculation Settings

Under the billing settings area, a new “Tax Calculation” section has been added that includes a few additional settings that affect how tax calculations may be performed depending on what has been configured.

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New “Tax calculations” section in the billing settings of an account

Within this section there are two additional settings with each being explained in greater detail below. As these rarely change, it is highly recommended a user educated in tax rules configures this for an account.

Account Lifeline Setting

This setting is used to determine whether the account is part of the lifeline program (https://www.fcc.gov/lifeline-consumers). This is a federally funded program in the United States that exists as a way for lower-income subscribers to receive the same high-quality service without being hampered by the full cost.

If the account is part of the program, use the toggle to enable it for them.

Please Note: This program is only based in the United States so if you are operating outside of the US, please ignore this setting.

Incorporated Address

This setting is used to specify whether the account is residing in a jurisdiction that is not incorporated. As it is an unlikely occurrence for an account to be located in a jurisdiction that is unincorporated, this settings is automatically enabled for each account, by default. However, in the rare instance that the jurisdiction is unincorporated, use the toggle to “disable” the setting, indicating this.

Please Note: When you are operating within North America, gaiia is able to leverage the Avalara integration to determine this for each account. Therefore, in these cases setting this for an account is unnecessary.

Error Logs

To provide visibility into any errors that have occurred, gaiia provides comprehensive error logs on each error that may have occurred when attempting to communicate with Avalara. Navigate back to the same area where the original integration was configured to review them. It is recommended you review them regularly to ensure all tax calculations are running smoothly.

If you see any errors that occurred you need clarity on, please don’t hesitate to contact our support team.

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FAQs

Q: I’ve Heard a PCode mentioned, what is that?

A: A PCode is a unique code used by Avalara to determine exactly where each account resides to determine which taxes need to considered when calculating taxes in a transaction. This code is generated automatically for each account whenever the physical address is added or updated.

Q: When is Tax Recorded in Avalara?

A: gaiia only ever tells Avalara to record taxes on invoiced revenue (i.e. a transaction part of an invoice). While gaiia also uses Avalara to temporarily determine what taxes may be part of an uninvoiced transaction, these are never record within Avalara and will not be part of your tax reporting or reconcilation.

Q: Are Discounts/Adjustments Recorded in Avalara?

A: Yes! gaiia ensures that all discounts/adjustments (when part of an invoice) are passed off to Avalara and recorded correctly.

Q: How is Avalara Aware of the Customer Type?

A: This is automatically determined based on the customer type currently assigned to account already. As you update and maintain this customer type, Avalara is also informed as well. Based on the customer type, certain tax calculations can change which is why Avalara needs to no this information.

To ensure that a customer type is always passed to Avalara, ensure that the new “Default Avalara customer type” global billing setting is configured with an appropriate customer type

Default Avalara Setting.PNG

Q: Does gaiia Support Tax Calculations on Voice Services?

A: Currently no. Once gaiia adds support for voice services in the platform, it will also work with Avalara to ensure tax support as well.

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