Only five US states don’t have sales tax. If you operate in any of the other 45, then you’ll need to spend some time collecting and accounting sales tax.
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Today’s technology can make dealing with sales tax a lot easier for small business owners like you. The right software can make a world of difference.
Ready to get started? Use the guide below to discover the right sales tax software for your small business.
There are plenty of sales tax software choices out there. Some of them are geared at big businesses, while others are more focused on small business. Some offer tax as part of more general accounting, while others specifically handle sales tax.
Some of the top contenders include:
- Davo Sales Tax
- Sovos Intelligent Compliance Cloud
These aren’t the only names in the game either. Intuit’s Pro Series often comes up, but this solution is often designed for accounting firms. Online platforms that provide all-in-one accounting are often mentioned as well.
The question for any small business own is, “How do you choose the best sales tax software?” You might pick Quickbooks because you recognize the name. Is it the best option though?
Even doing a quick comparison of the features of each program can leave you feeling a bit baffled. Does it matter if the solution is cloud-based? Do you need automation?
Sorting this out is easier when you know what you should be looking for. With the contenders in mind, think about some of the questions you should be asking.
Sales Tax Software or Accounting Software?
The first question you need to ask is about what your business needs from the solution. Are you looking for a sales tax app? Would a general accounting program be more beneficial to you?
Some platforms offer integrated accounting features. You can find solutions that offer you end to end management of your small business accounting. From generating an invoice to submitting your tax documents, it’s all here.
Other platforms focus on sales tax and tax compliance. They offer you capabilities for managing your tax. If you need to generate an invoice, you’ll need to use a different program.
If you already have accounting software, then you might want a solution that focuses on tax alone. If you’re hoping to get better management of accounting, a more complete solution might be the answer.
Think about Integrations
Next, you’ll want to take a look at how well the solution works with any other software you might already be using. This is important if you have any kind of accounting software already in use.
You don’t want to pick a sales tax platform that doesn’t integrate with the rest of your accounting. That’s going to cause headaches. It will likely lead to mistakes, lost time, and frustration.
That may be one reason QuickBooks is so popular. You know this solution will integrate with the rest of your QuickBooks accounting.
Integration may seem like it’s a feature of all-in-one platforms, but don’t count the tax-focused solutions out just yet. Avalara, for example, offers hundreds of integrations.
Remember to think beyond the accounting department here as well. Avalara integrates not just with accounting but with CRMs and e-commerce software too.
The experts at Clickandmortaraccounting.com say that last one is particularly important. If you’re using WooCommerce, then you want to be sure the sales tax solution you choose integrates with it. If your sales tax solution doesn’t play nice with your online store, you’ll find it creates more problems than it solves.
Clouds, Security Features, and More
Another common question people have about any kind of accounting software is just how secure it is. Security concerns are one of the reasons people are leery about cloud-based solutions.
The cloud may seem like it’s less secure at first glance. In all actual fact, it’s a step up for many small business owners.
The companies behind the software you’re using often have more resources at their disposal than you might. That means their cybersecurity budgets may be larger.
What’s more is that they may have a better understanding of the technology they’re using. Those budgets can be spent in a way that translates into better security.
Finally, these companies have a vested interest in providing the best possible security. They’re protecting the data of not just your business but every business that works with them. For a network like the one QuickBooks has, that’s millions of users.
Security should be a concern whenever you think about sales tax software or accounting solutions. Your financial data can be quite sensitive. You want to be sure the solution you choose is going to great lengths to keep it safe.
Security isn’t the only benefit of using a cloud-based program though. Working in the cloud means your team can take their work with them. In a world where remote work is more common than ever, that’s great news.
Cloud-based software can also be updated on a more regular basis. This is good news for sales tax solutions. Rules about what’s taxable, what’s exempt, and even rates are always changing.
With a cloud-based solution, you can be sure you’re getting access to the most up-to-date formulas.
Whether you’re planning to expand to another state or another country, you might be looking at growing your business.
Of course, you’ll want to take a look at the sales tax rules in any new territory. If you’re thinking about expanding to another state or already operate in several, you want a solution that can handle multiple sales tax inputs.
If you’re thinking about expanding internationally, then it may be wise to see if the solution you’re considering can handle that territory. If it can’t, you may find that you’re looking for another solution just as quickly.
Thinking about future growth is always a good idea. Even if you’re not planning an expansion right now, it’s always a possibility. See how many states and territories the solution you’re considering can help you in.
Features of the Software
Now it’s time to take a look at what the software does. Some solutions are specifically designed to automate sales tax. They’ll help you calculate tax on every transaction.
Others focus on compliance aspects, such as filing returns. As noted, all-in-one solutions try to manage your accounting from end to end.
Spend some time considering exactly what you want this software to do for your business. Do you need help with calculating sales tax? Are you hoping to automate that process?
If your concerns have more to do with filing than collection, a different solution may be the right choice.
You’ll also want to think about features like data synchronization and reporting. These are often overlooked, but they can make all the difference in how you use the software.
Pricing and Value
Finally, you’ll want to take a look at the pricing of any software solution you consider for how to manage sales tax.
Most business owners compare different sales tax tools on the basis of price. As a small business owner, you’re probably interested in a solution that offers a low price-point. You may not have a very large budget, so you might think the most affordable solution is the best.
This isn’t always the case. Of course, that doesn’t mean you need to pay big bucks for a software solution either. In fact, picking software because it has the highest price isn’t a good strategy.
You may think the most expensive software will offer you the most features. In fact, a lower-priced solution may be a better fit for your business.
Getting a free tool that doesn’t do what you need it to is as bad an investment. The higher-priced tool may offer features you don’t need or will never use, so you’re overpaying.
That’s why you should always consider the value of any sale tax tool you’re looking at. What does the software offer you? How well does it fit your business needs?
By considering value over price, you’ll be in a better position to pick the right software for your business.
Manage Your Small Business with Confidences
Sales tax and tax compliance are two of the most common challenges for small business owners. The right tools can help you make managing them easier. Asking the right questions will help you find a better solution for your business.
Once you’re confident about your tax management, you can turn to other parts of your business. You may have questions about cybersecurity, marketing, or even other tech that can help you as you grow your business.
If you have questions, we have answers. Armed with knowledge from our library of insightful articles, you’ll be ready to take on any business challenge.