Businesses are required by law to remit sales taxes they collect from purchasing consumers to the government. However, collection and remittance of sales tax is a challenging task, especially if the business deals with large orders.
The solution to this challenge lies in two leading software solutions curated to help businesses comply with sales tax obligations. While both software solutions work towards the same goal, they cater to different types of business.
This guide will explore both platforms and break down what each software solution is best suited for.
Overview of Both Platforms
Businesses in the United States can use the sales tax compliance software solution that supports the business model. Each software solution has a background that makes it the cornerstone of a particular business model.
TaxJar Background
Best suited for small to medium-sized businesses, the TaxJar software solution holds a special place for businesses in the e-commerce platforms. It is a great solution for businesses with a simpler sales tax obligation.
Besides having a user-friendly interface, this software solution has a straightforward pricing structure that many small and medium businesses can afford.
Avalara Background
Larger businesses with very complex sales tax obligations will need this software solution. Since it handles complex tasks on a large scale, the Avalara software solution is a prime solution for businesses in the following industries:
- Retail
- Software
- Manufacturing
- E-commerce
Pricing Structure Breakdown
Given that TaxJar and Avalara target different business sizes, users can expect different pricing structures if they subscribe to the two sales tax compliance software.
TaxJar Pricing Tiers
TaxJar has a tiered pricing model requiring businesses to pay for only what’s necessary. It has two plants for businesses to choose from:
- Starter Plan $19/month
- Professional Plan $99/month
A business that receives up to 200 orders per month can subscribe to the starter plan. However, a business receiving more orders per month will take the professional plan.
The premium is specially designed to handle the needs of larger businesses. However, its pricing depends on the number of orders received per month.
Avalara Pricing Tiers
Avalara software also provides tier plans. It offers three plans for businesses to choose:
- Basic Plan $19/month
- Standard Plan $83/month
- Custom Plan
Feature Comparison by Price Point
Businesses can expect to get different features of each software solution at the same pricing tier. The features offered determine the best sales tax software solution.
Basic Features
Both software solutions have the same basic plan pricing. However, Avalara has a more compressive basic plan. Avalara offers a feature for international tax compliance. This feature ensures a business can operate outside the border of its country.
Value Analysis
Avalara easily beats TaxJar in sales tax compliance calculations. While TaxJar uses advanced algorithms to calculate sales taxes within the US border, Avalara goes the extra mile to calculate more taxes such as VAT for international tax obligations.
TaxJar calculates sales tax daily and shows sales exempted from taxation. On the other hand, Avalara calculates all taxes at the point of sale that complies with multiple jurisdictions, including the US.
Business Size Considerations
TaxJar and Avalara provide services that align with different business sizes and operational needs.
Small Business Analysis
TaxJar is best suited for small businesses. The first feature it offers is a user-friendly interface that eases navigation of the screen with sales tax obligations. The affordable pricing plan also favors small businesses just getting off their feet.
Efficient integration with e-commerce platforms and limited complexities all make TaxJar a good solution for small businesses.
Enterprise Solutions
Avalara is a perfect option for larger enterprises because of its robust tax compliance capabilities. This software can calculate all sales taxes such as VAT and excise duty to ensure enterprises collect all sales taxes and remit them to the relevant revenue regulation body.
Avalara is even more adaptable since it integrates with more business systems. The integration allows the business to manage more taxes and meet its obligations.
Industry-Specific Considerations
Businesses should also factor in their industry-specific needs when choosing between TaxJar and Avalara.
E-commerce
A small business with an e-commerce presence will find the simple user interface easy to use when importing data from the platform for sales tax calculations.
However, if the business has a strong international e-commerce presence, it will need a more comprehensive tax calculation benefit of the Avalara software solution.
Brick-and-Mortar
If the business has a focus on serving consumers within the country’s borders, it will find TaxJar a good solution to calculate sales tax in the U.S.
If the interest goes beyond the borders, Avalara will offer an extensive suite of tools to make the business comply with taxation laws of different jurisdictions.
Decision Framework
Businesses should base their decision to choose one of the sales tax compliance tools on various factors:
- Business Size
- Industry Served
- Ease of Use
- Data Reporting Frequency
Conclusion
TaxJar serves small businesses better since it has a simple user interface and the pricing is more affordable. On the other hand, Avalara is the best software for businesses with an international foothold as it calculates all taxes owed to various jurisdictions.