How to configure Stripe?

Creating Stripe Customers

Define Shipping (if applicable) and Billing Addresses

To help Novabook accurately calculate sales tax, when creating a customer in Stripe ensure both shipping (if applicable) and billing addresses are set. At a minimum, you need to provide the country and postal code. The country should be an ISO 3166-1 alpha-2 code (e.g., GB for the United Kingdom).

If you're creating a customer via the Stripe API, be sure to include the following field: `tax[validate_location]=“immediately”`. This will return an error if the provided information is in an invalid format, allowing you to prompt the customer for accurate details.

For more details, visit the Stripe documentation here

Define Customer Tax Exemptions

To ensure accurate sales tax reconciliation in Novabook, define whether a customer is tax-exempt during creation. If you're using the Stripe API, the `tax_exempt` field can be set to `exempt` or `reverse`.

It is highly unlikely that a customer would be marked as `tax_exempt=”reverse”`, If you believe a customer should be marked as reverse, please confirm this with your accountants.

If you are defining your own tax rates (see this section for more details), a customer located outside your business’s tax jurisdictions should be marked as `tax_exempt=”exempt”`

Defining Products & Tax Rates

Define Individual Products with Tax Codes

To improve revenue tracking and prevent potential tax overpayments, you should avoid bundling products together. Instead, define individual products that can later be bundled within invoices or subscriptions. An invoice can have a purchase for 2 products and we would suggest itemising these separately with their individual prices to support with future reporting & accounting. 

Associate Products with Tax Codes

Each product should have a tax code assigned (you can find the list of tax codes here). This ensures that products don’t default to an incorrect tax code, which could lead to the wrong tax rate being applied. This can happen if there is no tax code set up and a default fallback is applied. 

[Stripe Tax Only] Enable Auto Tax via the Dashboard

When setting up Stripe Tax, we recommend using the Stripe dashboard for this step: Setting up Stripe Tax. This ensures that all future invoices and subscriptions are captured by Stripe’s Tax feature.

Define Tax Rates on Invoices & Subscriptions

When creating invoices and subscriptions, make sure to apply the correct tax rates.

For information on how to create tax rates, visit: Creating Tax Rates.

When creating invoices, you can apply the tax rate at the invoice or line item level. Use the following resources to help:

- For the entire invoice: Setting Default Tax Rates.

- For individual line items: Setting Tax Rates on Individual Items.

When creating subscriptions, you should apply the tax rates to the items. You can find API details on how to do this here.