5 Best Sales Tax Software For E-Commerce
In this article, you will learn:
Selling more online means growing revenues and profitability on one hand and increased tax complexity on the other.
With a growing e-commerce business, you may be reaching economic nexus with new states and jurisdictions that may require you to know their sales tax laws, identify the sales tax rates applicable, and keep track of sales tax filing due dates for every state.
One of the biggest challenges in sales tax compliance is that every state has its tax laws and rates, which may make it extremely complex for e-commerce businesses like yours.
You may end up being consumed by switching between filing and remitting sales tax laws of various states, which would mean losing time doing mundane tasks. This is where sales tax compliance software for e-commerce businesses comes in handy.
Sales and use tax software simplifies tax compliance by automating tedious tasks like establishing economic nexus, determining sales tax rates, calculating the sales tax payable, and filing and remitting sales tax with the relevant state authorities.
Also, some of the best sales tax compliance software providers offer solutions that enable you to file accurate and timely sales tax returns and streamline your sales tax compliance.
But with a variety of sales tax software out there, how do you know which is the best sales tax software for your e-commerce business?
Also Read: Top 5 Shopify Sales Tax Software Of 2024
How To Choose A Sales Tax Compliance Software Partner For Your E-Commerce Business?
Before jumping to consider a sales and use tax compliance software solution, it is important to have a defined strategy to choose the best sales tax software that meets your business needs. This is to save yourself from burning money on a SaaS provider who isn’t the best fit for your business.
Remember, you need a SaaS provider who treats you as a partner in your sales tax compliance journey. With such a sales tax software provider onboard, you would not have to worry about the complex and ever-changing state sales tax laws, the applicable sales tax rates, and filing and remittance due dates.
It will provide you with a team of professionals that supports you at every stage of your sales tax compliance, from establishing nexus, remittance, and automation, to streamlining your tax compliance. Here are some factors you must weigh while choosing a sales and use tax software that best suits your business needs.
1. Ease of Use and Automation
You don’t need sales tax software that is complex to understand and navigate. You need a solution that is intuitive and doesn’t require you to be a technology expert.
Likewise, sales tax compliance software should facilitate automation, enabling you to do away with managing sales tax compliance manually such as undertaking calculations to establish economic nexus with various states or filing sales tax returns on your own for various states.
2. Up-To-Date State Sales Tax Rates/Rules
If you are an e-commerce business selling in multiple states, tracking sales tax rates and the changes in the sales tax regulations can become extremely daunting. That’s where some of the best multi-state sales tax software prove useful as they do it all for you.
They will ensure that you get the updated rates and are filing taxes as per the updated state sales tax laws. You don’t have to go through the complex state sales tax laws for each state, invest time tracking the changes in state laws, or worry about what sales tax rates to charge.
3. Multi-State Tax Filing
Another important factor to consider in your sales and use tax compliance software is its ability to handle multi-state sales tax. If you are an e-commerce business selling in multiple states, ensure your software tax provider can handle sales tax filing and remittance across multiple states.
4. Excellent Customer Support
Sales tax compliance is complicated owing to different states having different state sales tax laws. Make sure you choose a sales tax software provider who provides you with a team of experts via phone, email, text, etc to help you understand sales tax management at times when you get stuck.
5. Seamless Integration With Accounting Platforms
Your sales and use tax compliance software must integrate seamlessly with your accounting software (such as Quickbooks, etc.) to have access to complete sales data enabling you to calculate sales tax payable accurately.
6. Exemption Certificate Management
You may be an e-commerce business selling to tax-exempt customers. In such a case, you need sales tax software that can handle sales tax exemption certificates. Remember, you don’t want to charge sales tax to tax-exempt customers.
Now that you know what to look for while choosing a sales and use tax compliance software, let’s check out some of the best sales tax software for e-commerce businesses.
Best Sales Tax Software For E-Commerce
TaxJar is known for its intuitive and easy-to-use online sales tax software. It streamlines and automates your complete sales tax cycle – from sales tax calculations, and nexus tracking to automated sales tax filing and remittance.
Powered by AI, it can classify all your e-commerce products and suggest the right tax code for every product resulting in accurate sales tax calculations in real-time.
Also, it tracks all the changes in the sales tax laws, rates, etc., and serves you with the latest sales tax rates, exemptions, sales tax holidays, due dates, etc. enabling you to off-load the stress of tracking the complex sales tax laws of various states.
You don’t need to depend on manual workflows to see what states you have reached economic nexus with. This is because TaxJar’s Nexus Insights automatically warns you to register for sales tax in states where you meet the Nexus threshold and criteria.
- Nexus insights tracking with an easy-to-understand dashboard
- Real-time sales tax calculations
- Automated filing and remittance
- Seamless integration with your e-commerce and accounting platforms for determining accurate sales tax liability
- Detailed sales tax reports to keep you on top of your business’s sales tax information.
One of the best parts of TaxJar is a huge list of integrations that allows you to connect your ERPs and e-commerce platforms with the sales tax compliance software within no time. Some of the key integrations are as follows. You can check out the TaxJar website for the complete list.
- Square Space
- Woo Commerce
TaxJar Deployment Options:
- Intuitive and user-friendly interface
- Easy to implement
- Extensive resources like tutorials, etc, and a knowledge base to help understand how to use the software
- Lower price
- As per reviews on Capterra, customer support is an issue reported by users. Phone calls shift to voice mail most of the time with no callbacks.
- You can’t adjust anything manually except tax-exempt transactions.
TaxJar has a rating of 4.5 on Capterra
Avalara AvaTax is commended by the users for its ease of use, accuracy in sales tax calculations, filing, and remittance, detailed sales tax reports, and extensive educational resources for understanding sales and use tax processes for tax compliance.
It allows you to automate your sales tax calculation to make your sales tax determination process faster, simpler, and more accurate.
Additionally, this cloud-based solution provides updated sales tax rates for every state, applies the updated sales tax laws, and notifies you on reaching nexus with states, thus enabling you to calculate your sales tax liability accurately.
- Apply latest sales tax rates for determining your sales tax liability
- Automate preparing, filing, and remitting of sales tax with Avalara Returns
- Ensure seamless exemption certificate management by streamlining certificate collection from customers
- Seamless integration with your e-commerce and accounting platforms
- Nexus tracking through Avalra AvaTax’s interactive map to calculate sales tax liability accurately
- Create detailed reports for estimating sales tax liability and exemption
Avalara AvaTax offers more than 1200 integrations that allow you to connect your e-commerce, accounting, and invoicing software to make your sales tax compliance seamless. Some of the key integrations are as follows. For the complete list of integrations, visit the Avalara Avatax website for the complete list.
- Microsoft Dynamics
- Shopify Plus
- Stripe Invoicing
Avalara Deployment Options:
- Easy to use. Very easy to collect and remit sales tax
- Detailed reports that make sales tax compliance seamless
- Extensive educational material that makes understanding the sales tax compliance process simpler
- Accurate nexus monitoring
- As per reviews on Capterra, users experienced poor customer support. Some faced challenges explaining their issues to the support team.
- Deactivated customers continue to receive links.
- Expensive solutions
Avalara AvaTax has a rating of 4.1 on Capterra.
TaxCloud is sales and use tax compliance software for small and mid-sized e-commerce sellers. Easy to set up and use, it is an ideal solution for those who have less technical and accounting skills.
Additionally, one can simply enter the address to retrieve the sales tax rate for that destination for applying an accurate sales tax rate on the checkout. With its real-time sales tax calculator, one can calculate sales and use tax across 13000 plus U.S. jurisdictions within no time.
- Accurate sales tax calculation with automated, real-time sales tax calculator
- Stay compliant always with TaxCloud’s nexus monitoring
- Seamless integration with your e-commerce platform owing to a variety of integrations.
- A complete view of your customer transactions and sales tax liability with the TaxCloud dashboard and detailed reports
No matter what e-commerce platform you use, TaxCloud allows you to stay sales tax compliant owing to its sales tax integrations with popular e-commerce platforms. Here are a few of the sales tax integrations. For a complete list, visit the TaxCloud website.
As per reviews on Capterra, users experienced poor customer support. Some faced challenges explaining their issues to the support team.
- Woo Commerce
TaxCloud Deployment Options
- Simple API makes things less complicated for developers
- Inexpensive solution offering great features
- Easy to use and implement
- Free filing for member states
- As per reviews on Capterra, users are not happy with TaxCloud’s customer support
- Many users are finding it difficult to understand what are they being billed for
- Certain integration documents need to be more detailed for seamless integration
TaxCloud has a rating of 3.4 on Capterra.
Vertex offers sales and use tax compliance solutions that are ideal for `companies of all sizes. It leverages its 40-year dedicated focus on tax technology and tax research to offer you solutions that automate your sales tax compliance process.
With its intuitive, easy-to-use interface and phenomenal customer support, Vertex is one of your best sales tax software partners enabling you to calculate accurate sales tax rates, implement updated sales tax rules, automate sales, and use tax return filing and remittance, thus streamlining sales tax compliance process without compromising accuracy.
- Automated sales tax filing and remittance helping you gain confidence in your sales tax compliance journey
- Exemption certificate management reduces audit risk, tax exposure, and penalties
- Seamless integration with your ERP, e-commerce, and accounting platforms
- Latest tax rates and rules for accurate sales tax calculations and reduced audit risk
Vertex offers a wide range of integrations that allow you to stay on top of your sales tax calculation, filing, and remittance as it streamlines your sales tax compliance. Here are some of the popular integrations offered by Vertex. You can check the Vertex website for the complete list of integrations.
- Microsoft Dynamics 365
Vertex Deployment Options:
- Outstanding customer support helps you resolve issues effortlessly. Knowledgeable and skilled tax professionals guide you through product or sales tax-related issues when you get stuck.
- Intuitive interface making navigation super easy
- Accurate tax rate calculations and implementation of the latest tax rules for accurate sales tax determination
- Great tax software for SAP users.
- As per reviews on Capterra, it can be time-consuming to add customers and their certificates.
- Tax categories are not as minute as they should be.
Vertex has a rating of 4.3 on Capterra.
Thomson Reuters OneSource Indirect Tax software is a comprehensive solution that helps you manage all facets of sales and use tax processes all in one place. It connects seamlessly to your ERP and eCommerce platforms so that you don’t miss any financial data while calculating your sales tax liability.
With the latest sales tax rules and rates, you can calculate your sales tax with accuracy and rely on Thomson Reuters OneSource Indirect Tax solution for your sales tax compliance. Its intuitive interface helps you estimate your sales tax liability with ease and accuracy so that you can focus on other strategic business operations instead of losing sleep over incorrect tax calculations and sales tax compliance.
- Determine your sales tax liability using the latest sales tax rates and regulations for more than 1.2 million zip codes across the U.S. and Canada.
- Automate sales and use tax process from tax determination to final remittance and compliance
- Easily import data from your eCommerce, ERP, and other third-party platforms.
- Collect tax exemption certificates with OneSource Certificate Manager and increase the efficiency of collection, validation, and reporting on sales and use tax exemption certificates.
Thomson Reuters OneSource offers a huge list of integrations that make you stay on top of your sales tax calculation and compliance. For the complete list of integrations, check the OneSource Integrations List. Some of the key integrations OneSource offers are as follows:
- Oracle NetSuite
- Microsoft Dynamics 365 Finance and Operations
- Sage 500
- Salesforce CRM
Thomson Reuters Sales Tax Software Deployment Options
- Very intuitive and easy to navigate.
- Its tree format helps you expand and close things so that you can see everything.
- Well-maintained and up-to-date sales and use tax databases making sales tax filing and compliance easy to manage in more than 100 states.
- Great customer support team.
- As per reviews on Capterra, users experienced user login issues.
- Making changes or editing fields is a bit challenging.
Thomson Reuters OneSource Indirect Tax Solution has a rating of 3.9 on Capterra.