Given the intricate and ever-changing sales tax rules in various regions, businesses often face challenges in accurately calculating, tracking, and filing taxes promptly.
Ecommerce sales tax software simplifies this by automating the process. It offers real-time tax rates and rules across multiple jurisdictions, seamlessly integrating with ecommerce platforms, marketplaces, and accounting systems.
This integration streamlines tax calculations, reporting, and filing, saving time and ensuring accuracy.
A. What is a Sales Tax Software?
Ecommerce sales tax software, a cloud-based solution, aids businesses in handling sales tax compliance.
It furnishes up-to-date sales tax rates and regulations for various regions, automates tax calculations, and integrates seamlessly with ecommerce platforms, marketplaces, and accounting systems to simplify tax reporting and filing.
Given the intricate and diverse sales tax regulations across jurisdictions, this software ensures businesses remain compliant, minimizing error risks and penalties.
It also saves time and resources typically spent on tax compliance, allowing companies to focus on business growth.
B. Top Sales Tax Software
Below is a compilation of 9 best sales software for your business. You can go forward with the one that perfectly fits your needs and covers all your wants and needs.
1. Lovat
LOVAT simplifies tax compliance for businesses by automating tax report submissions, offering online accounting, and aggregating sales data from multiple sources.
With a presence in 57 countries, LOVAT provides tax education, real-time professional support, and a comprehensive suite of tracking tools.
Reasons for Choosing LOVAT: LOVAT assures rapid resolution of tax reporting challenges. It maintains a lightweight and agile interface while serving as an encompassing solution for global VAT responsibilities.
Notably, its VAT calculation system, unless one is feeling particularly generous, ensures accurate payments. LOVAT stands out through its AI-driven predictive tax compliance feature, surpassing basic calculations by utilizing machine learning algorithms.
These algorithms analyze a business’s sales history, transaction patterns, and tax compliance record, proactively offering recommendations and alerts to maintain compliance with local tax laws.
Standout LOVAT Features & Integrations:
Key attributes encompass a real-time geolocation and jurisdictional accuracy feature, allowing precise determination of applicable sales tax rates and regulations for each transaction.
Unlike many competitors relying on zip codes or approximations, LOVAT employs advanced geolocation methods like GPS data and IP address analysis, pinpointing customer locations down to specific cities or streets.
This ensures the accurate application of sales tax rates, minimizing errors or audit risks. Integration encompasses platforms such as Shopify, Fulfillment by Amazon, eBay, Magento, WooCommerce, and Etsy.
Pros:
- Customizable and scalable
- AI-powered predictive insights
- Highly accurate tax calculations
Cons:
- Slight learning curve
- Limited integration with other systems
2. Vertex
Vertex stands as a leading provider of enterprise tax software solutions, specializing in sales and use tax calculation, returns, and exemption certificate management.
This software streamlines sales tax calculations, offering real-time rates and rules for all Canadian provinces and US states.
Reasons for Choosing Vertex: Vertex seamlessly integrates with various enterprise resource planning (ERP) systems, allowing businesses to handle tax compliance across multiple jurisdictions from a unified platform.
It provides audit defense support, tax research, and global tax solutions. Recognized for its precision, scalability, and comprehensive coverage of intricate tax regulations, Vertex is a favored choice among large enterprises and multinational corporations.
Standout Vertex Features & Integrations:
Key attributes encompass an integrated automated returns and filing service, simplifying the sales tax return filing process for ecommerce businesses.
This feature automates the generation and filing of sales tax returns directly from the platform, supporting e-filing and integrating with diverse tax authorities, significantly saving time and effort compared to the old manual filing.
Integrations encompass a wide array of platforms such as Accumatica, Adobe Commerce, BigCommerce, ChargeBee, commercetools, Elastic Path, IBM Cognos, Kibo Commerce, Microsoft Dynamics 365, Intuit, NetSuite, and many others in ERP, ecommerce, procurement, and point-of-sale domains.
Pros:
- Comprehensive sales tax automation capabilities
- Extensive global tax content and expertise
- All-in-one enterprise accounting solution
Cons:
- Complex initial implementation
- Pricing may not suit small businesses
2. Taxjar
TaxJar, a cloud-based sales tax software, is tailored to assist ecommerce businesses in handling sales tax compliance.
This software seamlessly integrates with various ecommerce platforms, shopping carts, and marketplaces, offering real-time sales tax rates and regulations for all US states and territories.
Reasons for Choosing TaxJar: TaxJar automates the sales tax calculation process, encompassing tax exemptions and product taxability, and it files sales tax returns on behalf of organizations and businesses.
It includes features like nexus detection, customer address verification, and sales tax reporting. With TaxJar, businesses can mitigate sales tax errors and penalties, save resources on tax compliance, and concentrate on business growth.
TaxJar Standout Features & Integrations:
Key features involve insights into economic nexus thresholds across states. It monitors sales and transaction thresholds triggering sales tax obligations in different jurisdictions, enabling proactive compliance management.
TaxJar also dispatches threshold alerts to businesses nearing or surpassing these limits, aiding compliance and averting unexpected tax liabilities.
Integrations span platforms such as Amazon, BigCommerce, eBay, Ecwid, Magento, Etsy, Paypal, Quickbooks, Salesforce, Shopify, Square, Squarespace, Walmart, and WooCommerce.
Pros:
- Detailed reports and dashboards
- Economic Nexus insights
- Highly accurate sales tax calculations
Cons:
- Occasionally, slow customer support response
- Limited international support
3. Thomas Reuters
Thomson Reuters ONESOURCE stands as a tax compliance software offering diverse tax solutions encompassing income tax, indirect tax, property tax, transfer pricing, and tax information reporting.
Additionally, ONESOURCE provides a tax research database with updated tax laws, regulations, and court cases worldwide.
Reasons for Choosing ONESOURCE: Despite its name evoking traditional news sources, Thomson Reuters delivers a robust impact in the realm of ecommerce tax software.
Utilizing the latest rules and rates, it accurately determines sales tax, use tax, VAT, and GST. The platform streamlines the management of sales and use tax, ensuring GST and VAT compliance through a unified system.
The team also furnishes comprehensive sales tax guidance and responses, all consolidated in a single platform.
ONESOURCE Standout Features & Integrations:
Key features include its high level of customization, catering to the specific tax compliance requisites of businesses across the spectrum, from small startups to large multinational corporations.
ONESOURCE aids businesses in mitigating tax errors, staying abreast of evolving tax laws, and enhancing overall tax compliance efficiency.
Integrations encompass platforms like Acumatica, BigCommerce, Braintree, Cavallo, Coupa, Epicor P21, and EFI solutions.
Pros:
- Advanced reporting and analytics tools
- Integration capability with diverse financial and ERP systems
- Comprehensive tax technology platform
Cons:
- Less suited for smaller businesses
- Complexity in implementation and usage
4. Quaderno
Quaderno stands out in the realm of sales tax software by simplifying the often intricate sales tax compliance process for e-commerce businesses. It boasts robust automation features that ensure precise tax calculation and reporting, catering to businesses with a global footprint.
Reasons for Choosing Quaderno: Quaderno’s excellence lies in its seamless integration with diverse e-commerce platforms and payment gateways, effortlessly managing sales tax obligations during customer transactions.
Its proficiency in handling multi-currency and multi-language transactions, coupled with real-time tax rate updates, positions it as an invaluable tool for international sales, facilitating businesses in navigating complex sales tax regulations effortlessly.
Quaderno further provides detailed tax reports and insights, enhancing transparency and ease of compliance for businesses of varying sizes.
Quaderno Standout Features & Integrations:
Key features encompass robust support for multi-currency and multi-language transactions, which are particularly beneficial for businesses catering to a global customer base.
It automatically converts transaction amounts into the customer’s preferred currency, generating invoices and receipts in multiple languages.
This capability not only enriches the customer experience but also aids businesses in reaching diverse audiences while maintaining precise tax compliance.
Quaderno’s multi-currency and multi-language capabilities prove especially advantageous for ecommerce enterprises operating across diverse worldwide markets.
Integrations include Braintree, GoCardless, Paypal, Square, Stripe, Shopify, CheckoutJoy, WooCommerce, Amazon FBA, Sendowl, Clickfunnels, Mighty Networks, and Xero, among others. Additional integrations are available through Zapier, though this may require a separate account and could incur extra costs.
Pros:
- Seamless integration with ecommerce platforms
- Support for multi-currency and multi-language functions
- Real-time tax rate updates
Cons:
- Incomplete coverage of all US tax codes
- Reporting could be more comprehensive
5. Davo
DAVO Sales Tax serves as a sales tax automation software tailored for small businesses operating in the United States.
It streamlines the sales tax compliance process by automatically gathering, filing, and remitting sales tax on behalf of businesses.
Reasons for Choosing DAVO: DAVO Sales Tax seamlessly integrates with an extensive array of point-of-sale (POS) systems, accounting software, and payment processors.
This enables businesses to automatically allocate sales tax from their daily sales and submit it to the relevant state tax authority.
The software offers real-time sales tax rates and regulations for all US states and territories, aiding businesses in maintaining compliance with evolving tax laws.
Standout Features & Integrations:
Key features revolve around the daily sales tax collection aspect, setting it apart from numerous competitors.
Unlike waiting until the end of the tax reporting period to accumulate and allocate sales tax funds, DAVO facilitates daily collection.
It automatically moves the collected tax amounts to a secure DAVO-held account, ensuring businesses have readily available funds for tax remittance when needed.
Integrations encompass QuickBooks Online, Clover, Square, Revel, and other major POS software.
Pros:
- Integration capability with point-of-sale(POS) systems
- Daily sales tax collection feature
- Fully automated sales tax filing and payment solution
Cons:
- Limited customization options
- Reliance on 3rd-party payment processors
6. Taxify
Taxify emerges as a cloud-based sales tax software crafted to assist businesses, regardless of size, in automating their sales tax compliance.
It delivers real-time sales tax rates and regulations for all US states and territories while seamlessly integrating with various ecommerce platforms, shopping carts, and accounting software.
Reasons for Choosing Taxify: Taxify originates from Sovos, a prominent figure in the tax landscape for the past three decades.
Covering over 14,000 tax jurisdictions across 50 states, Taxify alleviates the burden for ecommerce sellers by ensuring accurate rates.
It automates compliance with tax changes, simplifies the process of auto-filing tax returns, and offers access to tax experts ready to address nuanced needs and inquiries.
Taxify Standout Features & Integrations:
Key features encompass automated sales tax calculations, including tax exemptions and product taxability, along with filing sales tax returns on behalf of businesses.
Additionally, the software provides sales tax audit support, equipping businesses with essential documentation to respond to audit requests.
Integrations span platforms like Magento, Microsoft platforms, Oracle NetSuite, Quickbooks, SAP, and Shopify.
Pros:
- Intuitive and user-friendly interface
- Strong ecommerce integration capabilities
- Comprehensive sales tax coverage
Cons:
- Less cost-effective for small businesses
- Limited international coverage
7. Avalara
Avalara stands as a cloud-based sales tax software crafted to streamline sales tax compliance for businesses of diverse sizes.
This software offers real-time sales tax rates and regulations for all US states and territories, extending its coverage to encompass VAT and GST for international jurisdictions.
Reasons for Choosing Avalara: Avalara’s Avatax alleviates the primary accounting challenge by providing sales tax calculations and rules based on product classification and geolocation, countering overwhelm in accounting tasks.
With over 700 integrations, it facilitates seamless data management across various applications linked to your ecommerce platform. Additionally, Avalara efficiently handles exempt sales tax and adeptly organizes exempt documentation.
Avalara Standout Features & Integrations:
Key features include its Cross-Border functionality, a noteworthy solution addressing the complexities of international sales tax and cross-border ecommerce. This offering proves invaluable for businesses engaged in global trade or conducting international sales, encompassing an extensive database covering tax rules, rates, and regulations for over 200 countries.
Integrations encompass platforms like WooCommerce, Shopify, Quickbooks, Stripe, Magento, NetSuite, Sage, Infor, Amazon, BigCommerce, eBay, and SAP, among others.
Pros:
- Seamless integration with numerous systems
- Scalable solutions that are suitable for businesses of varying sizes
- Automation of the sales tax calculation process
Cons:
- Occasional delays in customer support response
- Costs tied to transaction volume
8. Quickbooks
QuickBooks Commerce functions as an inventory and order management software meticulously crafted to aid businesses in efficiently overseeing inventory, sales, and order fulfillment processes.
It encompasses a comprehensive suite of tools dedicated to enhancing inventory tracking, streamlining sales order processing, and managing multi-channel sales.
When paired with the core QuickBooks software, it forms a complete solution for ecommerce sales tax and inventory management.
Reasons for Choosing QuickBooks Commerce: QuickBooks Commerce excels as an ecommerce sales tax software, offering businesses robust and automated features for sales tax calculation and compliance.
It simplifies the intricate task of managing sales tax for online retailers by accurately computing taxes based on factors such as product type, location, and customer profiles.
Its integration with popular ecommerce platforms ensures automatic sales tax calculations during checkout, minimizing errors and effortlessly maintaining compliance for businesses.
QuickBooks Commerce Standout Features & Integrations:
Key features encompass a comprehensive solution for multi-channel sales tax automation. It not only accurately calculates sales tax but also seamlessly integrates with diverse ecommerce platforms, marketplaces, and sales channels.
This unique capability enables businesses to centralize sales tax calculations and compliance efforts across all their online sales channels, proving particularly beneficial for ecommerce enterprises with a varied online presence.
Integrations span over 450 business apps, including Square, Stripe, Insightly CRM, Mailchimp, Shopify, eBay, Magento, Squarespace, BigCommerce, and Etsy.
Pros:
- User-friendly and intuitive interface
- Support for multi-currency and multi-location functionality
- Robust capabilities for managing multi-channel sales
Cons:
- Requirement of base QuickBooks + QB Commerce
- Limited advanced analytics functionality
9. Taxcloud
TaxCloud excels in the realm of sales tax software, providing a comprehensive and highly precise solution for sales tax calculation and compliance. Its seamless integration with diverse e-commerce platforms simplifies sales tax automation and reporting for businesses.
Reasons for Choosing TaxCloud: TaxCloud’s extensive database of current tax rates and regulations, coupled with its robust exemption certificate management, ensures accurate tax calculations and compliance across multiple jurisdictions.
Moreover, it is a no-cost service for businesses, managing all state and local sales tax filings and remittances, and appeals to small to medium-sized enterprises seeking streamlined sales tax compliance without substantial expenses.
TaxCloud Standout Features & Integrations:
Key features encompass sales tax filing and remittance services for businesses. This unique attribute alleviates the compliance burden by automating the intricate and lengthy processes of filing sales tax returns and remitting tax payments to state authorities.
TaxCloud oversees the entire filing procedure, from preparing returns to submitting them to the relevant tax jurisdictions, effectively saving businesses considerable time and resources.
Integrations span a wide array of platforms like Ability Commerce, BigCommerce, Quickbooks, Square, Shopify, WooCommerce, Stripe, Odoo, Volusion, Cart.com, Oracle NetSuite, Acumatica, Magento, and Sage.
Pros:
- Database of current sales tax rates and rules
- Integration compatibility with various ecommerce tools
- Automated sales tax collection
Cons:
- It may lack complexity for larger enterprises
- Transaction volume limitations on lower plans
C. Criteria for Evaluating the Best Ecommerce Sales Tax Software
1. Core Functionality
Any ecommerce sales tax software considered for inclusion on this list must cover fundamental functionalities, including:
- Sales Tax Compliance Management: Capability to manage sales tax compliance and perform tax calculations per sale, with a preference for considering regional (state, country) specificities.
- Integration with Ecommerce Platforms: Ability to seamlessly integrate with online payment processing systems and ecommerce platforms.
2. Key Features
Vital features of ecommerce sales tax software are:
- Real-Time Tax Rates and Rules: Provision of up-to-date sales tax rates and regulations for various jurisdictions, encompassing state, county, and municipal levels.
- Tax Calculation Automation: Automation of the sales tax calculation process, covering tax exemptions, product taxability, and rounding rules.
- Sales Tax Reporting: Generation of detailed sales tax reports, including transaction-level data, total tax collected, and exempt sales, simplifying sales tax reporting.
- Filing Automation: Automation of the sales tax filing process, encompassing the generation of tax forms, payment reminders, and direct filing of tax returns with tax authorities.
- Exemption Certificate Management: Assistance in managing tax exemption certificates from customers, including automated validation and expiration reminders.
- Nexus and Taxability Analysis: Ability to assist businesses in determining their sales tax nexus (obligations in various states and jurisdictions) and analyzing taxability rules for different products/services.
- Customer Support: Provision of customer support, encompassing technical assistance and guidance on tax compliance issues.
2. Usability
Assessment of ease in learning and mastering the software, quality of tech support, availability of user support, tutorials, and training.
Evaluation of the ease of launching, updating sales details, and promptly computing taxes.
3. Software Integrations
Consideration of the ease of connecting with other tools, including API information for creating custom integrations, pre-built options, and third-party software connections.
Evaluation of compatibility with various Point of Sale(POS) software, ecommerce CRM software, or other ecommerce tools such as Shopify.
4. Value for Price
In-depth research on pricing details, including monthly plan costs, availability of free trials or versions, and insights into the value provided concerning the price.
Particular attention to pricing sensitivity for small businesses.
D. Summarizing Top Sales Tax Software for Business
Managing sales tax compliance can be a heavy burden on any business, whether a small startup or a big enterprise.
Due to the differing tax rates of various jurisdictions in states, countries, and internationally, businesses have to keep abreast of very complex tax regulations in order not to incur penalties and for smooth operations.
Sales tax software comes in handy here, providing a streamlined, automated solution for tracking, calculating, and reporting sales taxes.
Top sales tax software solutions feature a range of benefits, including detailed reporting, automated filing, and built-in compliance updates, ensuring that businesses can be assured of meeting tax obligations without extensive time and resources being spent on manual tax management.
This guide covered the top sales tax software currently available, comparing features in terms of user-friendliness, integration options, customer support, and compliance with regulations.
Businesses will be able to use this information to select the right solution for their super-specific needs. It is a highly customizable tool for complex, multi-jurisdiction operations or an easy-to-use tool for simpler tax compliance.
Sales tax software is the key to ensuring that businesses experience minimum errors in their taxation while they reduce their administrative workloads and concentrate more on growth rather than being stopped by compliance hurdles at the end of the day.
Suggested read: Best Help Desk Software: How to Offer a Great Customer Experience?
E. Common FAQs on Sales Tax Software
Who can benefit from sales tax software?
Businesses of all types and sizes, which includes e-commerce stores, retailers, manufacturers, and service providers, can benefit from sales tax software. It’s particularly valuable for those operating across multiple states or countries with varying tax regulations.
Are there differences between sales tax software and accounting software?
Yes, sales tax software specifically focuses on managing tax-related aspects such as calculations, compliance, and reporting. Accounting software encompasses a broader range of financial functionalities beyond tax, including general ledger, invoicing, payroll, and financial reporting.
What considerations should businesses have while choosing sales tax software?
Factors to consider include the software’s ability to handle complex tax rules, ease of integration with existing systems, user-friendly interface, scalability, pricing structure, customer support quality, and suitability for the business’s specific needs.
