Create and manage sales tax settings
About sales tax settings
Square offers flexible tax management for both in-person and online orders. When calculating sales tax, the system applies your designated tax rate to the total price of taxable items in each order.
You can customize your tax setup to match your business needs, choosing between automatic or manual tax configurations. The platform also supports various tax scenarios, including charges on local delivery and shipping fees, default tax rates for some online fulfillment methods and the option to include taxes within item prices. This versatile tax system lets you create custom tax rules to accommodate your specific business requirements.
Before you begin
You can create sales taxes from your Square Dashboard and point-of-sale app. You can manage them for specific fulfillment methods from Square Dashboard only.
Step 1: Add tax enrolments to automatically calculate Canadian taxes
Tax enrolment retrieves the applicable tax rate based on your inputs during the order process, but does not constitute registration with any tax authority. You should consult with your tax adviser to determine what, if any, registrations are required for your situation.
The automatic Canadian tax calculator charges Canadian sales tax based on all tax enrolments you add to your Square account and where you fulfill an order. Square sets your tax enrolment based on your Square locations, but you can always add more if you plan to ship orders from a province in which you have a business presence (but is outside of your existing enrolment). If you create a new point-of-sale location in a specific province, that province automatically appears under your tax enrolments.
To add a new tax enrolment:
Sign in to Square Dashboard and go to Settings > Account & Settings > Payments > Sales taxes.
Under Tax Enrolments, click Manage.
Click Add tax enrolment to choose a taxing province from the drop-down menu, then click Add province. Repeat as needed.
Click Done.
Step 2: Create sales taxes
- Sign in to Square Dashboard and go to Settings > Account & Settings > Payments > Sales taxes.
- Click Create tax.
- Under Details, enter a tax name and rate, and select the locations where the rate applies.
- Under “Tax application,” click the drop-down menu and choose either All current and future taxable items at selected locations, or Select items to choose specific items to apply the rate to. If an item is set as non-taxable, taxes won’t be automatically applied to the item on any in-person or online orders.
- Toggle on Apply tax to custom amounts to apply the tax to any custom amounts added to the cart.
- Under “Tax calculation,” choose either Additive tax to add the tax as a separate line item on your customers’ receipts, or Inclusive tax to include the tax in the item price.
- Under “Tax exemption,” toggle on Add exemption rule to specify when this tax should not be applied.
- Click Save.
- From your point-of-sale app, tap ≡ More > Settings > Checkout > Sales taxes.
- Tap + to create a new tax.
- Enter a tax name and rate.
- Under “Tax application,” tap either All items and services (current and future), or Select items to choose specific items to apply the rate to. If an item is set as non-taxable, taxes won’t be automatically applied to the item on any in-person or online orders.
- Toggle on Custom amounts to apply the tax to any custom amounts added to the cart.
- Under “Calculation method,” choose either Additive tax to add the tax as a separate line item on your customers’ receipts, or Inclusive tax to include the tax in the item price.
- Tap Save.
Step 3: Manage sales taxes for online fulfillment
When setting up sales taxes for delivery and pickup orders, you can choose to manually configure taxes or use the automatically generated rates. Manual rates are not available for QR code orders. Sales taxes can also be applied to delivery fees.
- Sign in to Square Dashboard and go to Settings > Account & Settings > Payments > Sales taxes.
- Under “Delivery and pickup tax overrides,” click Manage settings.
- Under “Delivery sales tax,” choose from the following:
- Apply automatically generated tax rates
- Manually apply taxes based on destination (click Manage manual tax rates to set up your manual rates)
- Apply default sales tax
- Do not collect taxes
- Under “Additional settings,” optionally Exempt delivery fees from tax.
- Under “Square Online QR code sales,” choose from the following:
- Apply automatically generated tax rates
- Apply default rates for QR code sales tax
- Under “Square Online pickup sales,” choose from the following:
- Apply automatically generated tax rates
- Manually apply taxes based on destination (click Manage manual tax rates to set up your manual rates)
- Apply default rates for pickup sales tax
- Under “Automatic and manual taxes calculation method,” choose either Additive tax to add the tax as a separate line item on your customers’ receipts, or Inclusive tax to include the tax in the item price.
- Click Save.
When setting up sales taxes for shipping and non-physical orders, you can choose to manually configure taxes or use the automatically generated rates. Sales taxes can also be applied to shipping fees.
- Sign in to Square Dashboard and go to Settings > Account & Settings > Payments > Sales taxes.
- Under “Shipping and non-physical tax overrides,” click Manage settings.
- Under “Domestic shipping and non-physical sales taxes,” choose from the following:
- Apply automatically generated tax rates
- Manually apply taxes based on destination (click Manage manual tax rates to set up your manual rates)
- Do not collect taxes
- Under “International shipping and non-physical taxes,” click Manage international tax rates.
A. Click Add tax rate and choose a country from the drop-down menu.
B. Enter a Country Tax Rate (%) and customer-facing Tax Name.
C. Click Save > Done. - Under “Additional settings,” optionally Exempt shipping fees from tax.
- Under “Automatic and manual taxes calculation method,” choose either Additive tax to add the tax as a separate line item on your customers’ receipts, or Inclusive tax to include the tax in the item price.
- Click Save.
Disable or delete sales taxes
You can disable or delete your sales tax rates at any time from either your Square Dashboard or point-of-sale app. Disabling a tax makes it no longer applicable to purchases. If you delete a tax, you cannot undo the deletion and you will have to create the tax again.
- Sign in to Square Dashboard and go to Settings > Account & Settings > Payments > Sales taxes.
- Select the tax you want to disable or delete.
- Click Actions, then Disable tax or Delete tax.