Sales tax automation software has made it easier than ever for ecommerce sellers and retailers to get compliant. To get the most out of your software, make sure it has these four important features.
Feature #1: Solutions Tailored to Your Industry
One of the most important steps in getting sales tax compliant is identifying whether your products or services are taxable on a state-by-state basis. The answer to this question varies significantly depending on your industry and the types of goods you’re selling.
For example, there’s a huge difference between how states tax professional service providers and how they tax software service providers. If your automation software misses this nuance, you might end up estimating a higher taxability than you actually have.
Because of this, it’s important to look for automation software that can handle taxability, exemptions and incentive programs that change your compliance. And if your ecommerce business operates in industries or states where product taxability is very complex, it’s worth consulting a sales tax specialist for assistance.
Feature #2: Robust Integrations
Integrations into ecommerce platforms and accounting software are a standard feature for automation software. But that doesn’t mean every provider can integrate with every platform.
If you use automation software that doesn’t integrate with your technology stack, it might cause more headaches than it solves. For this reason, it’s essential to conduct due diligence on a provider’s integration capabilities.
It’s worth noting that some providers offer a flexible API that lets you build custom integrations into software that’s not officially supported. So, your integration options may be bigger than they appear.
Feature #3: Automated Reporting
When it comes to audits, it’s not a question of if you’ll be audited, but when. And it’s much easier to prepare an audit defense with organized records and comprehensive reports. Automation software that can create comprehensive reports on demand will make an audit much more manageable.
Feature #4: Hands-on Consultation
The main benefit of sales tax automation is that it removes human intervention from complex and repetitive processes. But some problems require a human touch to solve.
You’ll eventually run into a situation where you need a level of service software can’t accommodate. (Like if they can’t fight an audit for you.)
In practice, most ecommerce sellers benefit from hands-on consultation and assistance beyond the software’s recommended steps. And it’s much easier to get that assistance if the software provides features that accommodate it.
For example, some software providers let you connect your account to your accountant’s, making life easier when returns are due. And some have partner programs that will connect you to a sales tax specialist for consolation.
Out of all the features we’ve reviewed, this is perhaps the most important. Sales tax compliance is easier when your automation software and accountants can work together to answer your questions.
Sales tax automation offers a number of benefits to ecommerce sellers. Understanding the capabilities and limitations of the system – as well as easy access to accounting support – is key to ensuring ongoing compliance.
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