Enrich invoices with tax

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Handling tax on invoices

Orb provides one-click integrations with tax providers in order to ensure compliance for your business. We recommend and integrate with solutions like TaxJar, Avalara’s AvaTax offering, Sphere, and Anrok which automatically maintain tax rates per nexus, preventing you from having to keep up to date with changes to the tax code or your tax obligations which can vary based on your sales. These tools also provide tax filing and reporting functionality, and being connected with your billing provider prevents data entry errors in this process.

Orb’s integrations with these tax providers provides the following functionality:

• Given a customer’s shipping address and your product’s tax classification (e.g. Infrastructure as a Service), Orb can calculate the appropriate tax amount.
• Orb will display tax line items on a per line item basis, as necessary, on invoices. This allows you to charge a different tax rate per product type on a single invoice.
• For automated charges that result from an invoice (e.g. via Stripe payments), Orb will include applicable taxes when creating the charge.
• In the case that an Orb invoice has an invoice level discount, Orb will distribute the discounted amount across the line items proportional to the line item totals.

Note that the tax calculation will reflect on both the Invoice portal as well as the invoice PDF.

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Displaying tax identifiers on invoices

If your customer has a tax ID that is required to be displayed on an invoice, you can set the Customer Tax ID on the Customer. Any draft invoices will display the customer’s current tax ID. Any issued invoices will save the customer’s tax ID at the time of issuance onto the invoice, which cannot be changed.

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Anrok

When your account is integrated with Anrok, all of your invoices will be automatically enriched with Anrok-sourced tax amounts. The Orb integration with Anrok supports computing tax for non-US based obligations like VAT.

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Overview

Orb’s integration with Anrok syncs invoice amounts to Anrok for computing tax, applying the tax amounts to the Orb Invoice, and reporting tax to Anrok so it can be used in filing procedures. When an invoice is eligible to be issued, Orb will create an ephemeral transaction in Anrok. When an invoice in Orb transitions to a status of paid, Orb will create the transaction in Anrok. This marks the transaction to be reported to a tax authority in Anrok.

For each transaction, Orb will also send the customer address in order to accurately compute tax based on your defined jurisdictions in Anrok. Anrok will compute the tax per invoice, returning the data to Orb, which Orb will use to enrich tax information for downstream use in executing external charges or external invoice syncs.

The transaction in Anrok will include the amount per line item, as well as the specified tax code to use for tax computation purposes. In the case that the Orb Invoice has a line item level minimum or discount, Orb will sync these as separate line items to Anrok. Line item discounts are always reflected in Anrok as negative line items.

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Prerequisites

1. We recommend reading the Anrok getting started guide before starting
2. Anrok account: Ensure you have an Anrok account, and ideally, an Anrok sandbox which you can connect your Orb test mode account to.
   • You can get access to a free Anrok sandbox by contacting the Anrok team
3. Physical Nexus: Ensure that you are correctly recording physical nexus. You can add physical nexus through the Jurisdictions tab and the “Manage Physical Nexus” button.
4. Products in Anrok: Create products in Anrok, that associate a tax configuration to each product that you sell in Orb. You’ll need the IDs for these products when configuring the Anrok integration in Orb.
5. Customer exemptions in Anrok: Upload valid exemption certificates for customers, if required. Please make sure to use the Orb customer ID when creating these certificates, so Anrok uses these certificates when calculating tax.

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Connect your Anrok account in Orb​

1. Navigate to Settings > Taxes in the Orb dashboard
2. Select “Connect to Anrok”
3. Create an Anrok API key if you haven’t yet.
   • In your Anrok account, go to settings.
   • In the “Developers” section click “Manage API Keys”
   • In the upper right corner click the “New key” button
4. In Orb, enter your Anrok API key and API key secret.
   • We expect the sellerId to also be included in the API key, so the format should be {sellerId}/{apiKeyId}
   • Invalid credentials will error at this stage.

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Setting up your tax codes​

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Anrok tax code configuration

Because different jurisdictions may tax items at different rates, you must also register the type of product in your Anrok instance. To do this, visit the “Product IDs” section of your Anrok account. You will need to create a unique Anrok Product for each type of product you sell. Note that one product in Anrok may be tied to multiple external product IDs for products of the same type.

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Orb tax code configuration

Orb supports tax code configuration per item used in Orb. Items represent a sellable product or service in Orb and are used during external syncs to ensure that invoice line items in Orb are correctly mapped to any accounting or tax services you rely on from these providers and are correctly handled.

To configure your Anrok tax code mappings, navigate to Settings > Items > Item name > edit. Fill in the External item ID box with the correct ID for the product created in Anrok.

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Configuring customers for tax computation​

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Address requirements​

Anrok requires each customer in Orb to have a valid shipping address. If a shipping address is not present, Orb will use the billing address for the purposes of tax calculation. In the case of an invalid or missing address, Orb will fail invoice issuance, and notify you in the dashboard of any failed invoices:

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Updating customer addresses​

Customer addresses can be set via the API or via the dashboard from the customer details page.

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Tax exempt customers​

In the case of a customer that qualifies for tax exemptions, you need to create a Certificate for the customer in your Anrok dashboard. The customer ID specified in Anrok should be the same as the Orb customer ID, so the exemption is used when reporting to Anrok.

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Tax IDs

If a customer has a tax ID configured in Orb, we will send that ID to Anrok when calculating and reporting tax. This can be used to determine if the transaction is subject to a reverse charge for eligible VAT countries.

The customer tax ID can be set via the API or via the dashboard from the customer details page.

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Avalara AvaTax

When your account is integrated with Avalara, all of your invoices will be automatically enriched with Avalara-sourced tax amounts.

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Overview

Orb’s integration with Avalara syncs invoice amounts to Avalara for computing tax, applying the tax amounts to the Orb Invoice, and reporting tax to Avalara so it can be used in filing procedures. When an invoice is eligible to be issued, Orb will sync the invoice as a SalesInvoice document to Avalara as a new transaction. When an invoice in Orb transitions to a status of paid, Orb will commit the transaction in Avalara. This marks the transaction to be reported to a tax authority in Avalara, for more information, see the Avalara docs here.

For each document, Orb will also specify the ShipTo and ShipFrom addresses in order to accurately compute tax based on your defined Nexus’ in Avalara. Avalara will compute the tax per invoice, returning the data to Orb, which Orb will use to enrich tax information for downstream use in executing external charges or external invoice syncs.

The document in Avalara will include the quantity, rate, and amount per line item, as well as the specified tax code to use for tax computation purposes. In the case that the Orb Invoice has a line item level minimum or discount, Orb will sync these as separate line items to Avalara. Line item discounts are always reflected in Avalara as negative line items.

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Prerequisites

1. Organization address: To accurately calculate tax with Avalara, Orb requires an account address to be set as the ShipFrom address in Avalara. This can be set from the Orb dashboard under Settings > Invoices.
2. Nexus in Avalara: Ensure that your Avalara account is correctly configured with any nexus states you may be obligated to collect and remit taxes in.

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Connect your Avalara account in Orb

1. Navigate to Settings > Taxes
2. Select “Connect to Avalara”
3. Enter your Avalara username/password. We recommend provisioning a separate account for your Orb integration. A valid set of credentials should display the following view. Invalid credentials will error at this stage.

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Configuring tax calculation in Orb

Orb allows a few controls for how Avalara is used in the invoice issuance process.

• Compute tax, when toggled on, Orb will always use Avalara to compute tax on any invoice eligible for issuance. If a customer is marked as tax exempt, Orb will forego tax calculation on any invoices for that customer.
• Commit tax, when toggled on, Orb will commit a transaction in Avalara when the corresponding invoice transitions from the issued state to the paid state. When toggled off, Orb will only use Avalara for sales tax calculation, not reporting. More information can be found in the Avalara docs regarding reportable transactions.
• Server side logging, when toggled on, Orb will log requests and responses for every request made to Avalara. These logs can be made available upon request via Slack.
• Avalara company code, Orb will use the company code specified as the company to create and report transactions with.

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Setting up your tax codes

Orb supports tax code configuration per item used in Orb. Items represent a sellable product or service in Orb and are used during external syncs to ensure that invoice line items in Orb are correctly mapped to any accounting or tax services you rely on from these providers are correctly handled.

To configure your Avalara tax code mappings, navigate to Settings > Items > Item name > edit.

The external items dropdown is populated by Avalara’s comprehensive list of tax codes, which can be found here.

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Configuring customers for tax computation

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Address requirements

Avalara requires each customer in Orb to have a valid shipping address. If a shipping address is not present, Orb will use the billing address for the purposes of tax calculation. In the case of an invalid or missing address, Orb will fail invoice issuance, and notify you in the dashboard of any failed invoices:

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Updating customer addresses

Customer addresses can be set via the API or via the dashboard from the customer details page.

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Tax exempt customers

In the case of a customer that qualifies for tax exemptions, Orb allows for configuring tax exempt status in the dashboard and the API.

From the webapp, this can be found under Customer details in the customers page. By default, all customers are eligible for tax collection.

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Stripe Tax

For your customers with a backing Stripe provider (e.g. Stripe Invoices), Orb will automatically use Stripe to enrich your invoice with tax calculations.

Stripe Tax configuration is done entirely through your Stripe Dashboard. Find the Stripe Tax documentation here: Stripe Tax. Orb maintains a mapping between prices and Stripe products to assign a per-line item tax treatment.

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TaxJar

When your account is integrated with TaxJar, all of your invoices will be automatically enriched with TaxJar-sourced tax amounts.

TaxJar integration can be configured through your organization settings.

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Sphere

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Overview

The Sphere integration allows you to automatically enrich invoices with tax amounts sourced from Sphere. Orb will request tax amounts from Sphere at invoice or credit note issuance, and Sphere will later fetch all customers, invoices, and credit notes for display in Sphere’s UI. Because Sphere fetches resources from Orb asynchronously, you may see a delay in the tax amounts being displayed in Sphere.

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Prerequisites

1. You need to have a Sphere account. If you do not have a Sphere account, sign up for one here.
2. You need to enable the Orb integration on Integrations page of your Sphere account. Find instructions on Sphere’s website here.

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Configuration

Once you’ve gone through the prerequisites above, you can configure Sphere by following the steps below:

1. Navigate to Settings > Taxes
2. Select “Connect to Sphere”
3. Enter your Sphere API key.

Unlike other tax integrations, you do not need to map Items in Orb to Products in Sphere. Sphere will automatically pull Items from Orb.

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Address requirements

Sphere requires each customer in Orb to have a valid shipping address. If a shipping address is not present, Orb will use the billing address for the purposes of tax calculation. In the case of an invalid or missing address, Orb will fail invoice issuance, and notify you in the dashboard of any failed invoices:

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Updating customer addresses

Customer addresses can be set via the API or via the dashboard from the customer details page.

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Tax exempt customers

In the case of a customer that qualifies for tax exemptions, Orb allows for configuring tax exempt status in the Orb dashboard and the API.

From the webapp, this can be found under Customer details in the customers page. By default, all customers are eligible for tax collection.

Once a customer is marked as exempt from tax, Orb will not report tax from this customer to Sphere.

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Tax IDs

If a customer has a tax ID configured in Orb, Sphere will pull that information and display it in the Sphere UI. Tax IDs can be set via the API or via the Orb dashboard from the customer details page.