Managing sales tax compliance is a complex challenge that businesses face. It becomes more demanding when the business is expanding to other states. Taxjar is a sales tax automation solution for efficiency regarding the management of taxes.
The tool is a system through which business owners can manage and comply with state and local tax regulations. The growing complexity of tax regulations across the US calls for sales tax automation.
Manual tax compliance is time-consuming with plenty of errors that can lead to heavy penalties.
In this article, we explore sales tax automation, Taxjar automation features, automation capabilities, processes, benefits, and cost considerations.
Understanding Sales Tax Automation
What is Sales Tax Automation?
Sales tax automation is a process through which businesses employ sales tax software to collect, calculate, file, and report data. The automation tools eliminate the need for using manual processes which reduces errors.
The tax tools ensure your business’s compliance with the ever-changing state and local tax regulations. Tools such as TaxJar integrate with marketplaces, e-commerce platforms, and accounting systems to streamline the calculation and filing of taxes.
Why Businesses Need It
Different states have varying tax laws that affect businesses that sell online. If a business does not comply, then measures like audits, damaged reputations and penalties follow.
Therefore, businesses require sales tax automation for the following reasons.
- Accuracy- Manual data entry has errors and automation reduces the chances of errors.
- Time efficiency– Using automation is fast allowing more time for business to focus on growth and not on tasks.
- Compliance- The need to adhere to current tax rules and laws means businesses must have Sales Tax Automation.
TaxJar’s Automation Features
Taxjar is a cloud-based sales tax automation solution. The tool is designed with a couple of features to make it efficient. Check the table below for an overview of the features and why they are key.
| Feature | Description |
| Real-time reporting | The feature provided up-to-date data on sales through various states. |
| Nexus Insights | It identifies the thresholds and qualification criteria for tax obligations in a state. Notifications available on the system |
| Automatic Tax Calculations | Your business tax calculations are calculated automatically based on location and jurisdiction. |
| Access comprehensive sales tax reports | You have access to your various multichannel transactions and state-by-state reports. |
| World-class support from our team | There is an extensive knowledge base, technical documentation, and a customer support team to help you when you need assistance. |
| Integrate seamlessly with e-commerce & ERP platforms | Connects to your eCommerce platforms seamlessly |
Key Automation Capabilities
The tool has three main automation capabilities for businesses across various states. Here is a preview of the capabilities.
- Data synchronization– Taxjar automatically syncs sales data from various platforms to ensure consistency and accuracy.
- Tax Nexus Identification– The tool automation assists businesses in knowing where they need to collect sales tax based on the economic Nexus threshold.
- Automated reporting– You can effortlessly generate detailed reports for each state making it easy for review and auditing.
Implementation Process
The Taxjar implementation process is easy. You may start with the free 30-day trial or register directly to begin the automation process. Below is the implementation process and the best practices.
Setup Steps
- Register your Taxjar account by providing your name, business name, business email, and password then register to begin your free trial.
- The second step is to integrate your e-commerce platform with Taxjar
- Configure your Nexus states then set “Calculate tax with TaxJar’s API” → Enabled.
- Implement product codes in case you have exempted items
- Configure the AutoFile to automate the tax sales fillings
- Review the data and verify it before the automation process begins.
Best Practices
- Review taxes endpoint to ensure you get the most accurate rates
- Review the transaction’s endpoint to ensure you send complete order details to the merchant’s account.
- Regularly review Nexus as sales tax obligations usually change with business growth into other states.
Business Benefits
Time Savings
Taxjar is a time saver as it eliminates the need for manual calculations and filing processes. Most businesses allocate the saved time to other core operation areas, saving resources.
Risk Reduction
The entire automation process minimizes errors during calculations and fillings, reducing audits and penalties. The tool offers real-time tax calculations meaning you are always in compliance.
Cost Considerations
Taxjar has a cost but you have a 30-day free trial where you’ll have access to the support team. The trial process does not require any credit card and you can cancel anytime. After the starter option, you can upgrade to the professional option.
The professional option gives you up to 10 integrations, the archive of historical tax data, and email/phone support. Customer care support is available for assistance.
Conclusion
Taxjar sales tax automation is a scalable solution that ensures all businesses fit. It integrates several platforms allowing you to automate tax processes on the same dashboard. The solution saves time and reduces risks in your business.
The implementation process is swift and the support team is always ready to help you with the integration process.