Avalara
Prior to setup in Invoiced, you will need to have already established an Avalara account and configured it for the jurisdictions where your business has nexus.
- Obtain your account ID and license key from the settings on Avalara.
- In the Invoiced application, go to Apps → Avalara. Click Install.
- Enter in your Avalara account ID and license key. Click Validate to connect to Avalara.
- Next, select the company code within Avalara that you would like to report sales tax into.
Once you've connected Avalara successfully there are additional settings that you can change to customize the behavior of the integration in Apps → Avalara → Configuration.
The Commit Mode setting controls how transactions are sent to Avalara. Here is an explanation of each commit mode:
- Commit invoices and credit notes - Sales invoices and return invoices are created and committed on Avalara automatically. Transactions will be included on your sales tax returns by default.
- Don't commit invoices and credit notes - Sales invoices and return invoices are created on Avalara, however, they will be created with an uncommitted status. In order to include these transactions on a sales tax return you must go into the Avalara application and commit them.
- Disable Avalara tax calculation - When used this will prevent the integration from performing any tax calculation for all new and existing transactions.
Once the integration is configured, you can start to benefit from instant, accurate tax calculations. The integration will generate tax in the following scenarios.
You do not need to add the Avalara tax rate to the document. Save the document without a tax rate; the integration will add the tax for you.
Creating an invoice will produce a sales invoice on Avalara. Modifying an invoice will produce the corresponding adjustment on Avalara, but only if you select the "Calculate Taxes" by clicking “Options” in the top right, when editing the invoice. Deleting an invoice will void the transaction on Avalara.
Creating a credit note will produce a return invoice on Avalara. The amounts on the return invoice will be negative to reverse the sales tax that was originally collected on the credited items.
Modifying a credit note will produce the corresponding adjustment on Avalara, but only if you select the "Calculate Taxes" by clicking “Options” in the top right, when editing the credit note. Deleting a credit note will void the transaction on Avalara.
Estimates will create tax as a sales order on Avalara in order to provide you and your customer with an accurate sales tax estimate. However, the sales tax on the estimate will not be filed on a tax return unless that estimate is converted into an invoice.
If you modify an estimate you must select the "Calculate Taxes" by clicking “Options” in the top right, to re-calculate taxes.
Avalara uses tax codes to identify products that have specific tax rates depending on where they are taxed. You can assign a tax code to an item in Settings → Items. If you're creating subscriptions, you can associate an item with a plan. This will apply the tax code on the item to the subscription invoices when they are created. Please note: if you bill something that is not set up as an item, it will bill at the highest tax rate based on the customer location.
Below are limitations and edge cases to be aware of when using the Avalara integration.
- Draft invoices will have sales tax calculated just like an issued invoice. This means that sales tax from a draft invoice would show up on a tax return.
- If you are importing invoices from an accounting system then sales tax will not be calculated on those imported invoices. This is also the case if you pass in calculate_taxes=false through the API when creating invoices.
- Ad-hoc line items that do not have an associated item will not have an item code or tax code passed to Avalara. They will be taxed as the default tax code (personal tangible property).
- When you are connected to Avalara, you cannot go to Settings → Sales Tax to change tax codes. It is recommended to not apply Sales Tax in addition to Avalara.
The upcoming invoice could not be generated. Sales tax assessment failed: The address value was incomplete.
This error indicates that the address is invalid or missing for either the customer or your business. Navigate to Settings → Business Profile to confirm that your business address is accurate. If you have entered a valid address in the customer profile, you'll see a green checkmark. Customer addresses are automatically verified using Google Maps.
