Sales Tax Software
Sales Tax Software Buyers Guide
Last updated: May 14, 2021
How to Pick the Best Sales Tax Software for Your Business in 2021
If you want to stay ahead in today’s business world you need to work fast and plan ahead. So, do you have a time saving solution for managing sales tax to prevent penalties once you’re being audited?
In a nutshell, that’s what sales tax software will help you with and this guide will show you how to identify the best vendor for your business.
Know this: not all products work for all businesses. For example, does your limited package cater for cross border purchases or are you wasting time calculating and rechecking figures? Perhaps it’s time you upgrade to a more advanced package, because yes, there are software products designed for all scenarios.
Let’s find your solution.
Who Needs Sales Tax Software?
When it comes to accounting software there are many functions and modules. Not all businesses will use all modules, because companies’ activities differ. Also, different regulations apply to different types of entities. Sales tax software is one of the accounting modules that may not always be necessary.
But if you’re selling items, chances are you need this. Or does your current software already have this feature? Other software packages—such as your accounting system—may provide you with tax modules. If not, or if it’s not sufficient for your activities anymore, you’ll need to invest in a standalone package.
Also consider an upgrade if you’ve progressed from doing local sales to international sales and your current software isn’t equipped to manage this aspect.
Your Business Features Must Guide Your Software Choice
It’s not about finding the best sales tax software or simply purchasing what others have told you works for them. Your sales tax software’s features must align with your unique setup, so start by listing business details and then look for a package designed to support you.
What You’re Selling
Consider your product list and whether sales tax applies. Don’t forget to consider features like wrapping, since sales tax must be charged on this, but only in some states. Your software must help you manage this.
How You’re Selling
In person sales is less complex than selling online. The latter may need more features and support from your vendor. Whether you’re selling locally, to other states or internationally will also determine the features your software must have.
Where You’re Selling
It’s important not to pay for features you don’t need. Elaborate sales tax programs such as TaxJar empower you to manage sales done in various states so you keep to all states’ tax guidelines. It also simplifies business with a payment module. But if you’re only selling locally, a much smaller package will suffice.
Are You Growing?
If your business plan projects changes and growth, think long term when buying software. You may need more features in future, such as tools to manage international sales. Can you add such a module to the current program easily? If not, should you opt for a vendor that does allow this?
Software Features to Consider
Once you have a list of relevant software packages, also vet them according to these requirements.
The most important aspect of this software is that it must automate the implementation of tax rates, even across borders. If you’re dealing with international clients it must support this.
Managing your sales tax returns comes in handy since you won’t have to calculate different states’ returns yourself anymore—software does it for you. This improves accuracy and you waste less time.
You should also look for a tax exemption certificates management portal. Let software help you track clients’ tax exemption certificates. If one expires, get notified by your software so you don’t issue tax free invoices to clients who aren’t eligible anymore.
- What deployment do you prefer? You can settle for cloud or on-premise software. Cloud software often provides more security.
- Does it integrate well? If it’s not part of your other software systems, make sure a standalone package can communicate with those other systems.
- Will you get support? You need excellent support to help ensure you manage this complicated business aspect correctly. Will you have 24/7 support and will the vendor visit you on site if needed?
- Does the software stay updated? Tax regulations change and you must be sure the software caters for these updates. Sales tax holidays must also be easily managed.
- Can you test it out? A free trial or a month-to-month payment option allows you to switch to another vendor if you realize a certain product doesn’t work for you.
When you consider the costs of sales tax software, don’t be too stingy. Remember that this software saves you the cost of paying a professional to do your tax returns. This can save you a couple of hundred dollars, so paying around $10/month—a commonly found rate for software of this kind—doesn’t seem outrageous does it?
If your returns are fairly simple and you don’t need in depth advice from a professional on where you can save more on your tax returns, paying for software is easily justifiable.
You’ll also find a few free options and products you’ll need to pay a once-off fee for, as much as $1500. If multiple employees need access to this software, prepare to budget for a ‘per-user’ payment option that can be calculated per year or per month.
Some software costs will be determined by the number of transactions or products. Calculate based on current sales how much you’ll be charged, but for accurate budgeting, also consider how it will add up when your business grows.
The good news: with different options you can find software with a payment plan that suits your budget and cash flow.
Purchasing sales tax software isn’t only about making business easier; finding the right product can save you money too. And with the range of cost options available to you, no business that charges sales tax should be without this software anymore. There is a solution that suits your pocket.
Do you have more questions on finding the ideal product? Leave your comments below.