How to Handle Ecommerce Taxes Automatically With Avalara
In this article, we’ll cover how Avalara automates sales tax collection. We’ll also discuss how to handle exempt sales, apply for sales tax permits in the states you sell in, and track your sales tax rates. But before we move on to Avalara, let’s take a look at the nuances of eCommerce sales tax. Here’s how it works:
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Avalara automates sales tax collection
Avalara automates sales tax collection, which is a key part of any successful eCommerce business. It reduces errors and saves time by automating tax calculations. It is an excellent tool for businesses that want to automate their tax management and be more responsive to their customers. It can be integrated with the company’s sales tax management software for a seamless experience. For more information, visit avalara.com.
Managing exempt sales
To comply with sales tax laws, eCommerce businesses need to have software to manage exempt sales. This is a big task that can be automated with sales tax software. This software can help online retailers with the calculation of sales tax, as well as create detailed reports. It can also connect automatically with tax offices, prepare tax returns, and forward taxes electronically. A good sales tax solution will also help manage documentation such as customer resale certificates. These certificates must be updated annually, and most often are not.
Applying for sales tax permits in required states
If you sell products or services through a marketplace, you may need to apply for a sales tax permit. The permit allows you to collect sales tax from your customers and report it to the state. Most states require that you register, but some do not. If you sell through more than one channel, you may be required to file a sales tax return in each state. You can get an application form online, or visit a local CDTFA location. You will need to provide information about your business and whether you are a partner, corporation officer, or limited liability company manager. For shorter sales, you can apply for a temporary permit.
Tracking sales tax rates
To comply with the legal requirements of most U.S. states, eCommerce businesses must track sales tax rates for each state where they do business. However, this can be tricky, particularly if you sell products through multiple channels or are in more than one jurisdiction. A good eCommerce sales tax automation software makes the process easy. One such software is TaxJar, which can be used within the BigCommerce dashboard.
Managing exemption certificates
The automation of exemption certificate compliance is a critical step in the successful running of an online business. An automated solution can help businesses collect, validate and store exemption certificates for every transaction made. Many eCommerce platforms integrate with external solutions to provide a comprehensive solution. In addition, digital solutions can collect, validate and store exemption certificates electronically. Because many e-commerce websites aren’t equipped with internal tax departments, it is important to ensure the efficiency of the process.