taxes

How to Set Up Taxes and Processing Fees in the Platform: A Step-by-Step Tutorial

Charles Higgins

Charles Higgins

— 12 min read
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Managing taxes and payment processing fees correctly is essential for any service-based business. We need to be transparent with customers about what they pay, and we need to ensure our books match what we collect and remit. In this guide we walk through exactly how to set up taxes and miscellaneous processing or service fees inside the platform so your booking pages, invoices, and payments display accurate charges. We cover step-by-step configuration, examples, best practices, troubleshooting, and answers to common questions.

Table of Contents

Why setting taxes and fees inside your platform matters

When we charge customers online, three things should be true:

  • Customers clearly see what they are being charged for.
  • We collect the correct amounts so taxes are remitted accurately to the right agency.
  • We can recover any processing costs when it makes sense to do so, without creating confusion or violating local rules.

If taxes or processing fees are not configured in the platform, the booking or invoice total will be misleading. That leads to customer complaints, reconciliation headaches, and possible compliance risk. Configuring these items inside the platform gives us a consistent, auditable way to show taxes and extra charges at checkout and to ensure invoices reflect the full amount billed.

Overview of what we will configure

We will walk through two main components:

  • Product or service tax settings that attach a tax percentage (for example, VAT, GST, or sales tax) to a specific service.
  • Miscellaneous charges or processing fees that apply as a percentage or flat amount to bookings, invoices, or other assets.

Both features can be combined or used independently. We will also show where to manage global tax entries and how to control when and where a processing fee applies.

Step 1: Open the service and find the payment settings

Start by locating the service you want to configure in the platform. This could be a single appointment type, a product, or any sellable service inside your account. Once you find it:

  • Select the service and click Edit to modify details.
  • Scroll down to the payment or pricing section.
  • Look for a configure tax option or a link to the product settings associated with that service.

Clicking configure tax typically opens the product page where taxes and miscellaneous charges can be attached specifically to that product or service. This ensures that every time that service is booked, the platform applies the correct tax and any configured service fee.

Step 2: Attach a product tax code or set a tax price

On the product page you will usually see a few different options for tax configuration:

  • Attach a product tax code. Use this when your product falls under a specific category such as beauty, personal wellness, education, or other industry codes used to determine taxability.
  • Include tax prices as per global settings. If we want to rely on a single set of taxes maintained centrally, use this to apply the global tax percentage automatically.
  • Or choose to override the global setting and add a tax rate directly to this product only.

If we use the global setting, make sure the global tax entries are already created. If they are not, the product will not show the tax percentage at checkout. If we prefer to add tax manually for a single service, we can do that too.

Step 3: Create or edit global tax entries

If we plan to use global settings, open the payment settings within the platform and locate Taxes. Here we typically have two key approaches:

  • Enable automatic taxes based on a tax category. Automatic taxes may help when the platform can calculate tax based on location or category. This option often requires choosing a tax category that best matches the service.
  • Manually add tax entries. This is the more common route for many small businesses who set a static percentage for a region.

To add a manual tax entry:

  • Click add tax
  • Enter a name for the tax. Example: Service Tax or Sales Tax.
  • Enter the rate as a percentage. Example: 5
  • Optionally add a short description.
  • Record the tax ID number or the tax agency that collects the tax in your region. This might be an IRS number, GST registration, VAT ID, or another local agency identifier.
  • Save the tax entry.

Once the tax entry exists, we can attach it to products or enable it as the platform's global tax so it is applied consistently across services and invoices.

Step 4: Configure miscellaneous charges (processing or service fees)

Processing or service fees are separate from taxes. They are typically used to capture costs the business pays for payment processing or to recover other administrative fees. Inside the platform this often called miscellaneous charges or service fees. To configure this:

  • Open the miscellaneous charges or service fee area in payment settings.
  • Enable miscellaneous charges if they are not already active.
  • Add a new charge such as Processing Fee or Service Fee.
  • Set the amount as a percentage or flat fee. Example: 2.5 percent.
  • Select which assets the fee should apply to: invoices, services, memberships, surveys, or bookings. You can enable it for all types or pick specific ones.
  • Choose if the fee should be included in the displayed price or shown separately at checkout. Showing it separately increases transparency.
  • Save the configuration.

These misc charges can be global and applied to all products, or you can choose to apply them selectively. In many cases we prefer to enable them globally and then exclude them from services where it is not appropriate.

Step 5: Attach tax and confirm fee on the service

After creating global tax entries and misc charges, return to the product or service page and ensure the correct tax is attached. You will see the option to use the global tax or a specific tax code for that product. For miscellaneous charges, the platform usually applies these globally and they will appear automatically at checkout for assets you selected.

For example, if we attach a 5 percent service tax to a laser hair removal service and we have a 2.5 percent processing fee enabled globally, a $100 booking will show:

  • Base price: $100
  • Service tax 5%: $5
  • Processing fee 2.5%: $2.50 (or the platform's calculated amount which may factor in tax depending on settings)
  • Total: $107.50

We should save the product after making these changes, then test the booking flow to confirm both the tax and the fee appear and calculate as expected.

Example: Booking flow and how charges appear to customers

Once configured, customers will see a breakdown at the booking or checkout page. The platform shows each line item such as the base service price, tax amount, and any miscellaneous fees. This clarity builds trust and reduces disputes.

In our example booking for a $200 service with a 5 percent tax and a 2.5 percent processing fee:

  • Service price: $200
  • Tax 5%: $10
  • Processing fee 2.5%: $5
  • Total charged: $215

Some platforms calculate processing fees after tax and some before. That setting depends on the software and local rules. Confirm the order of calculation in your settings so displayed totals match your accounting expectations.

Best practices for deciding tax vs service fee

We should treat taxes and service fees differently because they serve different purposes and may be regulated differently by local law:

  • Tax. Levied by a government authority and must be remitted accordingly. We collect taxes on behalf of the tax agency and cannot treat them as revenue. Always include the correct tax ID and agency for compliance.
  • Processing or service fee. Charged by the business to cover payment processing or administrative costs. This is part of revenue unless accounted as a contra expense. Some regions prohibit surcharging card transactions, so review local rules before applying separate processing fees.

When possible, show both as separate line items rather than embedding them into the price. Separate line items increase transparency and make reconciliation easier.

When to use global tax settings versus product-level tax

Choose global tax settings when:

  • Most or all of your products use the same tax rate.
  • You want to manage taxes centrally so updates propagate to every service automatically.

Choose product-level tax when:

  • Different services are taxed at different rates or have different tax codes.
  • Specific services are tax exempt.
  • You need special descriptions or tax IDs tied to a single product.

We often start with global settings for simplicity, then override at the product level for exceptions. This keeps maintenance low while supporting the complexity of real-world offerings.

Common pitfalls and how to avoid them

Here are recurring issues teams face when setting up taxes and fees and how we fix them:

  • Tax not showing at checkout: Check that the product is mapped to a tax entry. If you use global taxes, ensure the product has the option to include global taxes enabled.
  • Processing fee not applied: Make sure misc charges are enabled and set to apply to the asset type you are testing. If the fee is enabled only for invoices, it will not appear on booking pages unless configured.
  • Double charging tax or fees: Confirm that the fee is not included in the base price already. When in doubt, show fees as separate line items to avoid hidden double charges.
  • Rounding issues: Some platforms round line items differently. Test typical prices to ensure totals match your accounting expectations and adjust decimal settings where possible.
  • Local compliance: If local law bans surcharging, avoid passing merchant fees to customers in that jurisdiction. Consult local rules to stay compliant.

How to test changes before going live

Testing is fast and minimizes surprises. Follow these steps for a reliable test:

  1. Create a test service or use a low-cost service for testing.
  2. Apply the tax and enable the processing fee for that service.
  3. Open the booking page as a customer and proceed to the point where totals are calculated.
  4. Verify the display shows each line item correctly and that the math is right.
  5. Simulate a payment where possible or create an invoice to see how fees are applied in invoices.
  6. Check your accounting or payment reports after a test transaction to confirm bookkeeping entries match expectations.

How to present fees to customers clearly

Clarity reduces disputes and improves conversion. Use these tactics:

  • Show each charge on its own line with a helpful label. Example: Service tax 5 percent, Processing fee 2.5 percent.
  • Include a short explanation in the booking confirmation or invoice for what each fee covers.
  • If a fee is only charged for specific payment methods, call that out during checkout.
  • Offer an inclusive price option for customers who prefer a single all-in price and a separated price option for those who want detail.

Accounting and reconciliation tips

Accurate bookkeeping requires we treat taxes differently from revenue and fees. Follow these steps:

  • Create separate ledger accounts for collected tax and for processing fees if you pass them on. Taxes collected are liabilities until remitted.
  • When you collect a processing fee as a separate line item, decide if you treat it as revenue or use it as a contra expense to offset payment processing costs in your accounting system.
  • Run weekly or monthly reports from the platform to reconcile collected taxes and fees with your payment processor statements and bank deposits.
  • Keep records of the tax ID and agency associated with each tax entry. This helps during audits and when filing returns.

Practical examples and calculations

Example 1: Small service priced at $75 with 5% tax and 2.5% processing fee:

  • Service price: $75.00
  • Tax 5%: $3.75
  • Processing fee 2.5%: $1.88
  • Total charged: $80.63

Example 2: A $350 consultation that is tax exempt but incurs a processing fee of 3%:

  • Consultation price: $350.00
  • Tax: $0.00 (tax-exempt service)
  • Processing fee 3%: $10.50
  • Total charged: $360.50

Note: Rounding may change the last cent. Ensure rounding behavior matches your accounting policy.

When to absorb processing costs versus passing them on

Deciding whether to absorb processing costs or pass them to customers depends on business priorities:

  • Absorb costs when customer experience or competitive pricing matters most. Absorbing can increase conversion but reduces margin.
  • Pass on costs when margins are tight or when the customer expects to pay the merchant fee, such as in certain high-volume or subscription businesses.
  • Hybrid approach: Absorb for some payment methods and pass on for others. The platform often allows selective application based on payment type.

Whatever we choose, we should be consistent and transparent so customers are not surprised.

Troubleshooting checklist

If tax or fees do not behave as expected, work through this checklist:

  • Confirm the product has a tax entry attached if using product-level taxes.
  • If using global tax, ensure the product is set to include global tax prices.
  • Make sure miscellaneous charges are enabled and set to apply to the asset type you are testing.
  • Save all changes and clear any cached preview of the booking page.
  • Re-run a booking or create a test invoice to verify calculation.
  • Check rounding and whether the platform calculates fees on the pre-tax or post-tax total.
  • Review local rules to confirm that charging a processing fee is permitted in the payment jurisdiction.

Templates: Wording to display on checkout and invoices

Use short, clear wording that explains each line item without legalese. Example labels:

  • Service Price: base cost of the appointment
  • Service Tax (5%): amount collected for state tax
  • Processing Fee (2.5%): covers card processing costs
  • Total Due: final amount charged to the card

On confirmation emails, add one sentence like this: We collect government taxes where applicable and may include a processing fee to cover payment costs. This keeps communication straightforward and helpful.

Short testimonials from teams who followed this approach

We asked a few operators who implemented clear tax and fee settings and here are the common themes:

  • Our booking abandonment dropped because customers saw transparent fees before checkout.
  • Reconciliation became faster because taxes and fees were separate line items in our reports.
  • Customer service inquiries about billing decreased since there were fewer surprises on invoices.

These comments reflect the practical benefits we see when tax and fee settings are organized and visible to both customers and administrators.

Security and compliance reminders

Collecting payments and taxes carries compliance responsibilities:

  • Keep your tax registration information current inside the platform so invoices include accurate identifiers.
  • Review local surcharging laws before applying processing fees. Some regions strictly limit surcharges.
  • Ensure PCI compliance when handling payment data through the platform or associated processors. Use the platform's recommended secure payment methods.

Ongoing maintenance

Taxes change. Fees change. We recommend a quarterly review of settings:

  • Verify tax percentages and tax IDs remain accurate for each jurisdiction you operate in.
  • Update processing fee percentages if your costs change materially.
  • Audit a sample of invoices and bookings to confirm that fees and taxes appear and reconcile correctly in accounting software.

Quick checklist to finalize setup

  • Create global tax entries or product-level taxes as needed.
  • Enable or add miscellaneous processing fees and choose applicable assets.
  • Attach the correct tax to each service or enable global tax on relevant products.
  • Save and test the booking and invoicing flows with real values.
  • Confirm the accounting treatment and update ledger mapping.
  • Document the policy for when fees are applied or absorbed and share with the team.

How do we attach a tax to a specific service?

Open the service in the platform, click Edit, scroll to the payment section, and select configure tax for that product. Either attach a tax code from existing global taxes or add a specific tax rate to the product. Save and test with a booking or invoice to confirm the tax appears.

What is the difference between taxes and miscellaneous charges?

Taxes are government-mandated amounts that must be collected and remitted to a tax agency. Miscellaneous charges like processing or service fees are charged by the business to cover administrative or payment processing costs. Taxes are treated as liabilities in accounting, while fees are typically revenue or contra-expenses depending on accounting practices.

Can we apply a processing fee only to certain types of payments or services?

Yes. The platform typically allows you to select which asset types the fee applies to, such as invoices, services, memberships, or bookings. Some platforms also let you tie the fee to payment methods. Configure the fee settings to include or exclude specific items as needed.

Why is the tax not showing at checkout?

Common causes include: the product is not mapped to a tax entry, global taxes are not enabled for that product, or the tax entry was not saved. Verify the product tax mapping, ensure the tax exists, and save the product. Then test again and clear any cached previews.

How do we decide whether to absorb processing fees or pass them on?

Consider margins, customer experience, and local laws. Absorb fees to simplify pricing and improve conversion. Pass fees on when margins are tight or when customers expect it. Always review local regulations regarding surcharging before passing fees to customers.

Will taxes configured in the platform appear on invoices and booking confirmations?

Yes. When properly configured and attached to products or enabled globally, taxes and miscellaneous charges show as line items on booking pages, confirmations, and invoices. This provides transparency for customers and easier reconciliation for our accounting team.

What should we do if local tax rates change?

Update the tax entries in the platform immediately with the new percentage and effective date. If you maintain global settings, updating the global entry will propagate the change to all products that use it. Communicate any price changes to customers if totals will increase.

Final thoughts

Setting up taxes and processing fees inside your platform is a small administrative step that pays big dividends. It reduces customer confusion, speeds up reconciliation, and keeps your business compliant. We recommend taking a few minutes to review your current settings, add clear labels and descriptions, and run a test booking to confirm everything appears as expected.

When we make tax and fee configuration a regular part of our platform maintenance, we reduce surprises, improve transparency, and make bookkeeping far simpler. Keep settings documented, review them quarterly, and involve your accountant when in doubt about tax treatment or reporting. Clear, visible pricing builds trust and reduces administrative work, leaving more time to focus on serving customers.

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