Avalara TaxJar Taxify | Sales Tax Solutions for Ecommerce Sellers


hey it’s patti scharf CPA and co-founder
of catching clouds the leader in e-commerce accounting and I’m starting a
new series today about all the different solutions for e-commerce sellers with
respect to everything else in your business because we know that not
everything has to do with accounting a lot of business has to do with you know
delivering products to customers and things like that so I’m going to just
start a series and talk about the different things that we know all the
different research we’ve done for our clients and others on different things
that make your business what your business is so today we’re going to talk about sales
tax tools because the that is the hot topic from everybody if you have been
living under a rock you need to go watch these videos right here because this is
like the hot topic now things are changing fast and furiously and if
you’re going to be filing sales tax in any or all States you need to get a
sales tax tool to help you out so this is what we’re going to talk about today
and let’s get started all right so the big three players are
avalara tax jar and tax if I before we talk about those though I want to say
that there are actually two things that we need to pay attention to one is
collecting the right amount of sales tax and the other is remitting and filing
your sales tax returns after you have your sales tax collected all right so
the first thing we’re going to talk about with respect to collecting is the
sales tax engines so many marketplaces and shopping carts and all those guys
they will collect sales tax for you but some of the ones like like eBay
basically they say how much sales tax would you like us to collect and you put
in a flat number like I don’t know six percent but six percent is not the sales
tax rate in all of the states or all of the counties and cities and whatnot so
it’s a rough estimate that allows you to collect at least some of the sales tax
but it is by no means spot-on helpful in all situations all right there are other
shopping carts that will have like a table so maybe it’ll have like a list of
all the states and you can enter an amount state-by-state it may or may not
be updated for you and again it’s more helpful than not but really the most
helpful thing is to get a sales tax engine and tax chart exif i Avalara they
all have a sales tax engine there are another dozen or more companies beyond
that that also do the same thing where you basically attach it to your
WordPress site woo come Shopify whatever you have and it will
calculate the sales tax for you based on depending on the sales tax engine
sometimes they’ll do it based on what the product is but certainly based on
where the customer is what the rules are for the different states and things like
that so Avalara is by far and away like the
big player in that arena they’ve been around like forever
and they’ve got really good really great information they’ve got lots of
information on product taxability they’ve got lots of information on the
different rates in the different states and jurisdictions County cities and all
that so pretty much all of the shopping carts will have a connection to a velar
and in some cases it may be their only one so like for big Commerce when you
sign up to sell on big commerce they will by default just have you on the
Abelar system and you can just use avalara for low volumes of sales once
you hit a certain threshold which I don’t know what that threshold is but
once you start picking up and selling in greater volumes basically you need to
sign up with Avalara and start paying them to use their sales tax engine and
they charge like on a per transaction basis so they charge pennies or whatever
every time you sell a product you’re using that sales tax engine to calculate
the amount of sales tax you need to collect you do not have to use the same
sales tax engine as you are filing so you could have Avalara calculating your
sales tax and you can be filing using texture or tax fire or something else
all right so let’s talk about filing your sales tax returns like I said there
are basically three big players let’s talk about Avalara first Avalara has two
main products they’ve got ab attacks and they’ve got a Valera trust file Ave
attacks is really for accounting departments for big companies that are
selling all over the place it’s it’s super robust like think think along the
lines of Xero or QuickBooks Online compared to NetSuite like a
taxes that next sweet level of sales tax calculations so it’s super robust it’s
really great it comes with a big ticket price so you can use it it’s really
expensive but it’ll give you good results however it does not connect to
all the different shopping carts that are out there doesn’t connect to Amazon
and Shopify and big commerce and Magento and all of those so for an e-commerce
seller it’s expensive and it requires a lot of manual work so it’s really not
playing in the same space as tech start AXA Phi and Apple era trust files so
this is why they created a bolero chest file it’s been around for a few years
like four or five years about the same as texture and toxify and a Valera trust
file the the good news on that one is that it connects to all the different
shopping carts and Amazon and Shopify Magento and all that stuff the bad news
is that from a technological perspective like from just their ability to
manipulate data and things there are quite a bit behind tax jar and taxa fide
they just have never quite caught up to them so for example like Amazon when
you’re pulling down information from Amazon Amazon will keep all the
addresses related to the wedding registries and babies baby registries
and things like that in its separate database so when a Valera trust file
pulls that information down it doesn’t have those addresses and so it will just
assign the addresses to whatever wherever your company is which is
obviously not correct so so the accuracy of the information you’re getting out of
trust file just isn’t super great now let me just say that these tools and all
the tools that you see all the cloud tools that are out there they are
developing like crazy like they’re just evolving over time so anything I’m
telling you today may or may not actually be accurate like tomorrow
so you need to check in with these different companies and make sure that
you that I’m giving you good information based on what we’ve seen the last time
we looked at Ewa Lera was about nine months ago and every time we look at it
we check it out a couple of times a year for the past several years and it just
never quite has information that’s as accurate and up-to-date as tax jar and
tax Phi so honestly we don’t even really consider it as an option for our clients
but I will say that as a company avalara is really great and I mean if they could
like combine Avot acts and their trust file products together to create
something really good for Amazon sellers or you know ecommerce sellers in general
it would be amazing but it’s it’s just not there yet so but a velar is a
company it’s they they’ve got lots of experience they’ve been around the
longest they have great resources online they’ve got lots of educational
resources I would definitely check out their blog so so they’re great they’re
just not helpful yet for e-commerce sellers in my opinion
the next one I want to talk about is tax to our tax jar is the most set and
forget system of the three if you have like a standard ecommerce business one
that’s just selling on Amazon or just on Shopify or just a couple of different
channels like that and you don’t have anything funky going on it’s a really
great tool especially I think if you have tax jar as your sales tax engine
and as your filing system because one of the issues with tax jar is it will only
file information based on the sales tax that it calculates it’s not going to
file it based on what you collect so if you’re using tables or something for
your sales tax engine if you’re using tables instead and you’re just kind of
estimating your sales tax you’re not going to be able to remit what you
collected you’re going to remit what you calculate so there might be a
discrepancy you might have to come out of pocket for some of that sales tax
which nobody likes to do so so that’s not ideal but it’s understandable so if
you have sales tax engine and the violence
being the same and it’s a standard system and you don’t have anything funky
like any tax-exempt stuff or product product taxability stuff that’s like
products that are exempt then it’s a really good system the one other issue
that we had is we have so many clients who come to us and they’re just like
okay I was supposed to be filing sales tax like six months ago or a year ago
and I want to get caught up on those let’s go back in time and pay the
penalties and interest and stuff tax jar doesn’t allow you to do that so if like
you need to go back in time you’re gonna have to either do all that stuff by hand
or whatever they they just they can’t go back there only going forward so if
you’re like a brand-new company and you’re like starting off clean and
you’re straightforward like texture is actually a really good bang for the buck
and and worth your while checking out it’s a really good company from the
sense that like they they have their finger on the pulse of both ecommerce
and sales tax and they’ve got some great information in their blog so I would
definitely follow them at a minimum so the last system I want to talk about is
taksa fight aexif is actually the system that we use when we were looking for a
system to use like four or five years ago they were the only ones that filed
in all 50 states and they gave us PDF copies of the returns they gave us
payment confirmations I I think tax jar does all that stuff now I think takstar
just started filing in all 50 states like last year July of 2017 I believe I
could be wrong but I think I’m right but years ago like we needed a solution
right away and tax by like did all that they’re also a lot more flexible so we
have a lot of clients who not only do they sell on these different shopping
carts but they may have some business-to-business sales which are
exempt from tax and we can tweak the information based on the orders we can
edit the sales tax returns themselves before they actually get filed so
they’re a lot more flexible we really care about accuracy and so we make sure
that we have a system that we can kind of jury-rigged if we need to if the data
is not cooperating so so that’s that’s really why we use tax fight the other
thing is you can go back in time and file historical returns so the system is
really great for that so like I said things change on a dime so check out all
these different companies the prices are pretty comparable no matter which system
you use whether it’s a velar trust file tax jar or taxa Phi but they do have
sliding scales based on your volume so if you have just a little bit of volume
you’ll be a smaller fee if you have a lot of volume you’ll pay higher fees so
you’ll have to check out the pricing based on your own personal situation
that it’s you can’t tell like I can’t give general advice on what’s most cost
effective it’s all kind of generally around the same ballpark but hopefully
this video helped you kind of narrow down some of the issues that you might
be having and things that you’re looking for I hope that you found this video
helpful if you did please like comment and share if you haven’t already please
subscribe and I’ll catch you later

9 thoughts on “Avalara TaxJar Taxify | Sales Tax Solutions for Ecommerce Sellers

  1. Thanks for watching! Do you use one of these tools? Which one? And what do you like/dislike about it?

  2. Thank you Patti! This is the kind of information so many sellers need to know.

    Alan Smith – Sales Tax Consultant

  3. Thanks for the video. Question for you. Who is actually physically collecting the sales tax from the orders? Is that Tax Jar or Amazon? I am just curious if that sales tax gets pulled aside. Or Does Amazon just collect it and pay it out to you with your bi-weekly payouts?

    Thanks

  4. Thanks for the mention and in-depth overview, Patti. Very helpful. 👏Lots of great tips!
    As you mentioned, technology moves fast and we wanted to share a few notes on some of our features…

    -TaxJar has an integration with BigCommerce if sellers are looking an alternate to the built-in calculations: https://www.bigcommerce.com/apps/taxjar/
    -We also recently launched support for exemptions/wholesale sellers. Learn more on our blog: https://blog.taxjar.com/feature-set-tax-exempt-wholesale-transactions/
    -If you need past years data TaxJar can also help you look backwards by downloading historical data within your account: https://support.taxjar.com/article/23-once-i-sign-up-for-an-account-how-far-back-does-the-data-go. Depending on your situation, we typically don't support the filing of past returns, but you can always get your reports created based on data from previous years in just a few clicks.
    -You can find our pricing here: http://taxjar.com/pricing and we aways provide a free 30-day trial for all merchants or developers

    Thanks again!

  5. I would not listen to anything this woman is saying. Avalara's AvaTax integrates with over 600 platforms and can steaming the information from the calculations straight to filing RETURNS. TrustFile is for only those few marketplaces or platforms we can not integrate with. It DOES NOTHING SHE IS TALKING ABOUT. Why would they file incorrectly for their customers. I doubt this woman has even used any of these solutions. She also said AvaTax takes a lot of manual work but this is also completely incorrect. You do have to map out your products but after that maintenance is minimal – Especially compared to Tax Jar. Listening to her will get you audited.

  6. Thank you for the helpful video. From my research, Avalara by far has the most comprehensive options, with cost-effective scalable solutions. Plus they can integrate with over 600 accounting platforms.

  7. Hi, thank you so much for this video. It was very helpful. Do you know if TaxJar does anything internationally? I am selling worldwide as well and I have no idea how to file those sales tax.

Leave a Reply

Your email address will not be published. Required fields are marked *