Why AutoFile Sales Tax?

Florida Dept. of Revenue WebsiteLast Friday (7/8/16), I wrote about the two largest producers of sales tax applications, Avalara and TaxJar, both of which integrate with QuickBooks Online and Xero. Both allow you to automatically file your sales tax returns, but there’s a fee for each return you file. Before you pay those fees, consider these questions.

  1. Do you have time to do it manually, or can your time add more value to your business by engaging it in another activity?
  2. Are you concerned about transposing numbers or other human errors on your sales tax return(s)?
  3. Can you accurately calculate the discount offered by many states for on-time filings? (Sometimes these are a flat rate, sometimes they are tiered or complicated in another fashion.)
  4. Have you ever missed a filing deadline, incurring both penalties and interest?
  5. Do you find state websites for sales tax filings to be cumbersome and generally user unfriendly?
  6. Are you quite sure you thoroughly understand how to collect and file sales tax?

Your answers to these questions will help you decide whether to file your sales tax returns manually.

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Not Taxed by Sales Tax

Each year, the issue of collecting and filing sales tax becomes more complex. Many revenue items that once were not taxed (such as services) are now taxed in some jurisdictions. If your company is subject to sales tax in multiple jurisdictions, it’s even more complicated. If your company sells nationwide–or even worldwide–then sales tax can become very, well, taxing indeed. In the United States alone, there are thousands of tax jurisdictions, and their sales tax rates constantly change. Keeping up in order to be compliant can be mind-boggling.

Luckily, there’s a way to avoid being taxed (stressed) by sales tax. Yep, you guessed it–there’s an app for that too, for both QuickBooks Online and Xero. The two major players are Avalara and TaxJar. Avalara is the larger company, and serves all kinds of businesses. TaxJar is geared more towards small ecommerce sellers who use platforms like Paypal, Etsy, eBay, and Amazon. TaxJar primarily aggregates sales data and facilitates the sales tax filing process.

Avalara, on the other hand, offers two primary applications–one for calculating and filing sales tax, and the other for tracking sales tax exemption certificates. Avalara integrates with QuickBooks, Xero, and hundreds of online shopping carts and other financial applications. Pricing for both Avalara and TaxJar is based on transaction volume.

Both Avalara and TaxJar integrate with QuickBooks and Xero. If your company needs help calculating, collecting, and/or filing sales tax in multiple jurisdictions, I encourage you to check out at least one of these products.

Download my free report, Bookkeeeping Myths.