Manage Shopify order sales tax in NetSuite

NetSuite has its own native tax engine for handling tax associated with an order. At times you may run into situations where the calculated tax within the NetSuite is different from the tax details shared by Shopify. It is possible that the tax total might not match between the two systems if information such as tax tables between both the systems do not match. This could become a major hassle for your accounting teams to match the sales tax for each order and be able to remit the correct amounts to the respective states. After each order is imported into NetSuite, the Integration App immediately compares the calculated tax totals with what was sent from Shopify. If there is a difference between the tax values calculated by NetSuite and the values sent from Shopify, the difference is stored in the ETAIL TAX TOTAL VARIANCE custom field on the sales order. You may report on these fields in NetSuite on a periodic basis and adjust your G/L with a journal entry if variance values exist.

This feature has been designed to help you manage tax within the Integration App in a way to avoid any tax variance which is recorded within NetSuite’s sales order record. To properly map taxes and accounts in NetSuite and Shopify as to how much tax was paid per order, go the Integration App's Settings > Order > Tax tab.

The Tax tab primarily contains the How would you like to bring sales tax into NetSuite field. This field enables you to specify your preference for mapping tax totals between NetSuite and Shopify. The field consists of the following options:

Option 1: Overwrite taxes with Shopify tax amounts

The leading practice is to use this option.  When you select this value in the How would you like to bring sales tax into the NetSuite drop-down list, the following new fields are displayed which allows you to control the way tax information is updated in NetSuite:

• Default tax code when no match is found in NetSuite
  This is a mandatory field. Enter the internal id of a tax code to be assigned to each order or line item for every order received from Shopify. The value that you provide here is used, by default, when NetSuite is not able to identify and apply a valid tax code for an order. This field does not impact tax code applied on an order when NetSuite’s native tax engine is able to find and apply a tax code for an order. The tax rate is always calculated based on total tax and total order cost based on information coming from Shopify.
  
  Use the following steps to find the internal id of a tax code:
  1. In NetSuite, navigate to Setup > Accounting > Tax Codes. The Tax Codes page is displayed.
     
     
  2. Select the internal id for an existing tax code that you wish to use in the Integration App or create a new tax code to be used when NetSuite fails to find a tax code corresponding to the shipping address on the order.
     
     
• Assign the default tax code to all orders
  When you enable this checkbox, the Integration App will apply the tax code selected in the Default tax code when no match is found in NetSuite field to all Shopify orders. Even when the NetSuite is able to identify a tax code to be applied for an order, the Integration App will force apply the default tax code to all orders. In case when there is no tax information present in the order, the sales order record in NetSuite is still updated with the default tax code and the tax rate will always be updated as Zero.
• Per-line taxes on transaction enabled in NetSuite
  Enable this setting if you want the tax code and tax rate to be displayed at the line-level for every item associated with the sales order. You must only enable this field if taxes are enabled in NetSuite at the line-level. To enable this setting in NetSuite navigate to Setup > Accounting > Taxes  > Setup Taxes.
  
  The Set Up Taxes page is displayed. Select the Per-Line Taxes ON Transactions field.
  
  When the field is not selected:
  The total tax is calculated for the entire order and one tax code for an entire order is applied as shown in the following screen:
  
  When the field is selected:
  The total tax is calculated for every item in an order and individual tax code and tax rate is displayed in every line as displayed in the following screen:
  

Option 2: NetSuite calculates taxes using its own tax engine

When you select this value in the How would you like to bring sales tax into the NetSuite drop-down list, the Integration App will not influence the tax calculation for an order. In this case, NetSuite’s native tax engine will be used to calibrate the tax code and tax rate for an item.

Option 3: Add total tax against a single line item on the order

When you select this value in the How would you like to bring sales tax into the NetSuite drop-down list, the following new fields are displayed which allows you to control the way tax information is updated in NetSuite:

• NetSuite item to track the Shopify tax amount as a line item
  This is a mandatory field. Select the non-Inventory type NetSuite item to track total sales tax in Shopify against a single line item on the sales order. The selected item is used to create an additional line item record within the Sales order and the tax amount is then updated in the Amount field of this new line item. The tax rate is always zero in this case.
• Per-line taxes on transaction enabled in NetSuite
  Enable this setting if you want tax code and tax rate to be displayed in the line-level for the item selected in the NetSuite item to track the Shopify tax amount as a line item field. You must only enable this field if taxes are enabled in NetSuite at the line-level. To enable this setting in NetSuite navigate to Setup > Accounting > Taxes  > Setup Taxes. The Set-Up Taxes page is displayed. Select the Per-Line Taxes ON Transactions field.
  
  When the field is not selected:
  The total tax is calculated for every item in an order and the total tax amount is updated in the Amount field of the line item. The tax code and tax rate are displayed at the header level in the sales order for an entire order as shown in the following screen:
  
  
  When the field is selected:
  The total tax is calculated for every item in an order and the total tax amount is updated in the Amount field of the line item. The tax code is also displayed in the line item record as shown in the following screen: