Configure taxes with Stripe and NetSuite

The Stripe Connector for NetSuite offers several options for tax workflows, depending on your integration.

Stripe Billing

If you use Stripe Billing or Stripe Invoicing and invoice automation, we recommend the following:

1. Use Stripe Tax to automatically calculate taxes in Stripe.
2. After billing the customer with a Stripe invoice, the connector records the Stripe-calculated tax amounts to NetSuite.
3. Use NetSuite as a ledger of taxes owed and paid. The connector syncs the data for net taxes owed from Stripe to NetSuite. Don’t use NetSuite for detailed reporting on state or local taxes owed.
4. Use Stripe Tax reports to manage detailed tax reporting and remittance.

Learn how to set up Stripe Billing with Stripe Tax.

E-commerce

If you run an e-commerce store using an application (such as Shopify, WooCommerce, or Magento), you can use that app to help with tax calculation. You can then use an app like Celigo or In8 to sync order data to NetSuite. Stripe and the connector aren’t involved in the tax calculation process.

Billing managed in NetSuite

Stripe and the connector aren’t involved in the tax calculation or recording process if you manage your invoicing process in NetSuite. If you use a tax system other than Stripe Tax or Avalara, you might need to build a custom integration into Stripe. For more details, see the tax systems that work with Stripe.

Payments without a Stripe invoice

If you create payments without an invoice, then Stripe and the connector can’t help with recording taxes in NetSuite. Because there’s no line-level detail, Stripe can’t determine the product purchased, the amount paid for the product, or the amount of tax paid.

Represent taxes in NetSuite by either:

• Adding to the invoice a line item that posts to a liability account (recommended)
• Setting a tax rate on the line-item level of the invoice

You can find tax settings in the connector app by navigating to Settings > Controls > Taxes.

If you’re an international company, the price might include tax. You can specify the gross amount at the line item level and let NetSuite calculate the correct tax owed based on the customer’s address.

If you use a tax integration bundle in NetSuite, such as AvaTax, you can automatically calculate taxes based on the NetSuite invoice information.

(Recommended) Taxes as a separate line item

When representing taxes in NetSuite, specify the taxes as a separate line item on the invoice to record the taxes calculated in Stripe. If you use this option, taxes aren’t recorded at the line item or header level of the NetSuite record. Even if you use the NetSuite tax engine, you might want to specify taxes as a separate line item. For example, Stripe might have more detailed address data or product tax codes compared to NetSuite.

If you use Stripe Tax or Stripe Tax Rates, you can find the tax amount, source, and tax percent for each tax rate in the line item’s description.

For example, if you use Stripe Tax, you see 8.88 of Sales Tax - New York at 8.875% generated by Stripe Tax. For multiple tax rates, you see .38 of Tax - Seattle at 3.75%, .65 of Sales Tax - WA at 6.5%. If you only use Avalara, the calculated tax rate displays and you see 6.00% Tax by Avalara.

Tax reports for recording tax as a NetSuite line item

Use Stripe tax reporting to see a breakdown of the taxes generated in Stripe. Complete tax reporting isn’t available in NetSuite; however, you can use the tax line item to see the total amount of taxes paid.

Taxes represented on every line item

Differences in features between Stripe and NetSuite might lead to incorrect tax percentages. To account for this, the connector matches the total amount of tax calculated on each line in NetSuite with the total amount of taxes on each line in Stripe.

Multiple tax rates on a line item

While NetSuite only supports two tax rates, Stripe supports multiple tax rates on a line item. To account for this difference, the connector combines the tax rates from Stripe into a single percentage that’s set on the tax_rate1 property for each NetSuite line item. In most cases, you can add all of the tax rates to generate the total tax rate.

In rare cases, adding the tax rates won’t generate the combined tax rate. Instead, you can calculate the tax rates based on the total tax amount. To produce the total tax amount for the line, you can apply each tax rate to the pre-tax amount. The total tax amount from a summed percentage might differ from the total tax amount from separate tax percentages. This is because of compounding rounded tax amounts when the tax rates are separate.

For example, a line item has a value of 1.00 USD and tax rates of 9.5% and 9.6%. Both tax rates generate a tax amount of 0.10 USD, totalling 0.020 USD of tax for the line. Adding the tax rates results in a total tax rate of 19.1%, which generates 0.19 USD of tax instead of the total 0.020 USD. The connector matches the tax amounts on each line in NetSuite with the line amounts in Stripe. For this example, the connector calculates a tax rate of 20% so that a total tax of 0.020 USD generates on the line in NetSuite.

Tax on credit note line items

You can’t use credit note automation if you represent taxes as line items in NetSuite. Because NetSuite has limitations that prevent setting the tax rate on credit memo line items, you can use Taxes as a separate line item instead.

Tax rates with discounts on line items

The connector uses the tax rate to calculate the proper tax amount for any items with a discount applied. The invoice that the connector creates in NetSuite includes separate line items for the original prices (pre-discounted) and the total discounts.

For example, say you have a line item on your invoice with the following amounts:

The tax rate is 10% and applies to the post-discounted amount of 80 USD. This results in a tax amount of 8 USD.

The connector generates an 8% tax rate in NetSuite for the line item, based on the pre-discounted amount of 100 USD and tax amount of 8 USD. This differs from the tax percentage used in Stripe.

Inclusive line-level tax

If your company is based in the European Union, the amount shown to customers most likely includes tax. In NetSuite, the amount charged to the customer appears in the gross amount transaction column. NetSuite calculates tax through either the NetSuite tax engine or the Avalara NetSuite integration.

You can also calculate taxes using a custom system. If you do, complete the following for the connector to correctly categorise the tax line item:

1. Use a standalone Stripe invoice item for the exact tax amount.
2. Add a netsuite_tax metadata key that’s set to true.