When it comes to Sales Tax, there are two things every ProAdvisor knows. First, Sales Tax is a mess that can quickly get anyone into trouble with tax authorities. Second, Avalara is the best way to prevent sales tax from becoming a problem. And that's why this is not my typical App Aware style article either, because we all pretty well know a lot about Avalara when it comes to Sales Tax, or so I thought. That's why the best thing I can do is make you 'App Aware' of so many more of the offerings that Avalara makes available to both you and your clients.
Since starting as Sr. Editor for Insightful Accountant I have had the opportunity to work with Avalara on several different occasions. You may remember my ‘Sales Tax Tuesday’ series which ran for more than a year on two different occasions. Those series featured the Sales Tax requirements of every state along with unique aspects of sales and use tax like tax holidays and product exemptions.
I personally found it very interesting to look at the jurisdictional requirements of each states’ sales tax for those articles, but the reality is that sales tax isn’t just a ‘state-based tax.’ There are thousands of sales tax rates, rules, and geographic differences that control how much a business must collect for this tax when they make a sale. That’s why Avalara’s automated sales tax products, like AvaTax, compute sales tax based on location, item, legislative changes, regulations, and more. Automated sales tax management enables you to accurately perform in-house calculations of your tax without the burden of having to add personnel to track down rates in each jurisdiction, make changes to manual tax tables, and try to stay current on regulations. It also insures that every purchase address is geospatially verified for the most accurate rates based on street-level tax rates rather than relying on less-accurate zip-code only rates.
Avalara not only brings cloud-based sales tax compliance to you and your employees via AvaTax no matter where you are based, where you work, or where you are making a sale, but they also offer an integrated AvaTax solution for most Point-of-sale, ERP, and accounting solutions on the market. Avalara has more than 1,000 integration partners (like the one shown in the example below) offering AvaTax as their sales and use tax ‘solution of choice’.
A 3rd-part Accounting Solution with Integrated AvaTax.
But did you know that AvaTax isn’t just for Sales and Use Tax, it can also calculate rates for Customs and duties, Goods and services tax, Communications Tax, Excise Tax, Consumer use tax, Lodging tax, Alcohol Beverage tax, and even Value-added (VAT) tax. AvaTax even provides cross-border compliance and international tax calculation when your goods move across international borders.
Unfortunately, computing the tax, even knowing the right tax to compute, isn’t the only key to understanding sales tax. Thanks to a little thing called ‘Nexus’ which defines the relationship between a seller and states that require sellers to register, collect and remit sales taxes for that state, a lot of businesses may not think they have responsibilities for sales tax anywhere but in one state actually do. You might just do a little bit of business outside your state, or so it seems, but even then, you still need to know what triggers nexus for each state in which you do 'any' business. That’s because numerous business activities, as well as specific dollar-values of sales, may establish nexus with a specific state. Unfortunately, nexus relationships and business activities vary from state to state, so how is a business, especially a small business expected to know all the nexus rules?
Once again, Avalara can help via their comprehensive sales Tax Registration Service. If you are selling in multiple states in the United States, or you plan on doing so, you can use Avalara to do all your sales tax registrations for all the states in one easy process. Simply fill out one form and let Avalara prepare and file your sales tax registrations in every required jurisdiction. They will even make payments directly to the licensing authorities and follow up with each of the licensing agencies within a business week to make certain everything is A-OK. No more tracking down who to contact, trying to get the correct set of forms to file, how much you have to pay and in what form the taxing authority accepts payment on which days of the week. Just let Avalara handle your required jurisdictional filings as easily as you would let them file your sales tax returns if you had them managing your sales tax liabilities.
And speaking of managing your sales tax liabilities, since you have automated the collection, tracking, and registration of all of your sales tax, why hassle with the preparation, filing, and remittance of returns? Obviously, Avalara has the expertise to guide you in making certain that the correct amount of tax is being computed and collected on every sale, for every locale, and that you are properly registered for every jurisdiction in which you do business in compliance with nexus, so it only makes sense that you should reduce your risk of a sales tax audit by letting them provide you with the benefits of their managed Returns Service for your filing requirements. With Avalara's filing services you will know you’re submitting returns to the right places at the right times by automating your filing calendar, something that's especially important since each of your Nexus states have their own filing deadlines and frequencies.
But that’s not all, because a business has responsibilities to manage the records of those other businesses, they do business with when they accept their sales tax exemption certificates, or when they issue a sales tax exemption certificate for purchased merchandise. That’s a lot of paperwork that needs to be documented and tracked because when the sales tax inspector comes around these are records, they expect you to produce. That’s why Avalara once again provides resources you can use to meet these requirements.
Avalara’s Vendor Exemption Management streamlines and optimizes the vendor exemption process to help you avoid sales tax on exempt purchases by ensuring you always have the proper up-to-date exemption certificates. Failure to have the proper exemption certificates can result in over-payments, supply chain delays, audits, and even penalties that can seriously impact your business.
CertCapture is Avalara’s advanced compliance document service. It can help businesses with complex compliance document management needs. Available as a stand-alone product, CertCapture’s Auditor Dashboard gives you improved access to requested documents so you can easily validate, and report on any certificate for compliance purposes. And, if you are using AvaTax, CertCapture integrates with it for even greater exemption services for collection, verification, storage, and access of certificates.
You can hope that you don't mess up your sales tax trying to do it yourself, and you can cross your fingers that the sales tax auditor doesn't find anything wrong when they come to check your calculations or records. You can wait around for that state three states away to send you a letter advising you that you have failed to register with them for sales taxes, and to also remit based on the fact that you have been 'conducting business' in their state electronically. Or you can contact Avalara for a free demo of one or all of their product offerings, or to head over to their website to sign-up for a trial. If you are using a 3rd-party solution then contact your solution provider about integrating with Avalara products, to make certain you are 'sales tax safe.' And if you are a ProAdvisor, Business Consultant or Accountant then check out the Avalara Partner Program.
Be certain to check out the free Avalara CRUSH Virtual 2021 event being held on May 27th.