For any business, making sure that your tax rates are accurate can be a challenge. But that process can become a lot harder when it comes to eCommerce – especially since your store is most likely selling to customers all over the globe. Every area has different tax rules; even addresses within the same zip code can be subject to completely different tax rates. Not to mention, different products may be taxable and non-taxable, like clothing and food; this also varies from state to state.
Manually setting up each individual tax rate and keeping them up to date, in addition to keeping track of and filing all of your transactions, can take hours of your time and thousands of dollars to do right. If you do take the manual approach, even the most careful business owner can run into an unexpected reporting error, which not only throws a wrench in your returns, but may even call for a tax audit.
To solve this problem, automated tax compliance software Avalara has created AvaTax to integrate with your online business. Avalara’s tax software is designed to streamline the entire process, from shopping cart to tax return. So, we sat down with Avalara’s Marketing Manager, Melody Hutchinson, to see what their software is all about.
Founded in 2004 by Rory Rawlings, Avalara is a software solution that automates sales tax compliance for small and mid-sized businesses. Hutchinson says that Rawlings started the company when he realized that “clients needed an efficient and affordable way to calculate, manage, and remit sales and use taxes to supplant the cumbersome, time-consuming and often error-prone manual processes they were following.” At this point, the seeds for Avalara had been planted; it was clear that there was an industry need for a service like AvaTax. Avalara’s software provides an end-to-end solution that includes tax calculation, filing, and exemption certificate management to business owners. Currently, Avalara is serving over 20,000 customers in more than 190 countries. Their headquarters are located in Seattle, WA.
Avalara’s product lineup includes several different tax-related services, with AvaTax being their flagship product (and the one that can be integrated with 3dcart). To use the AvaTax software, you can choose between three different subscription plans that vary in both price and transaction limits:
- Standard: $50 per year for 250 transactions
- Plus: $95 per year for 500 transactions
- Premium: $200 per year for 1,500 transactions
- Enterprise: Quotes via contacting a representative
Pricing for AvaTax is volume-based, meaning it’s designed to scale and grow with your business. Each AvaTax plan also comes with product taxability, sales tax liabilities reports, and a trial couch. You can also add an automated sales tax filing for $54 per return to each plan. If you’d like to try out their tax service before committing to a paid plan, Avalara offers a 60-day free trial.
Web-Based or Locally Installed?
Avalara is a cloud-based SaaS (software as a service) platform that is entirely web-based. This means that you don’t need to install any programs in order to use Avalara’s sales tax solution; it’s all accessible via web browser. Because of this, their software and your tax rates will always be up-to-date and accurate since Avalara can send out updates at any time.
Additionally, an open API is available to allow their software to be integrated with almost any other service. Although they already support over 700 pre-built integrations, developers can use their API to quickly and easily build an integration for their desired application.
How does Avalara work?
So, we’ve established that Avalara’s AvaTax software can streamline and automate sales tax rates on your online store. Hutchinson states that AvaTax is “reliable and sub-second fast to accurately support high user conversion.” But, how exactly does it accomplish this? Let’s take a look at the features you’ll find with AvaTax.
AvaTax Sales and Use Tax Features
- Automated Calculations: Avalara calculates tax rates, including Value Added Tax (VAT) rates, in real-time via its database to be automatically input into your shopping cart or invoice at the time of purchase.
- Geospatial Locations: Rates are mapped to exact locations rather than zip codes for more accurate rates.
- Tax Holidays: AvaTax automatically keeps track of tax rate changes and tax holidays in its database and reflects those changes on your online store.
- Streamlined Sales Tax (SST): Avalara is a state-certified service provider, or CSP, for providing no-cost sales tax calculations, returns preparation, and filing in 24 U.S. states.
- 700+ Prebuilt Integrations: Avalara supports integration with a long list of ERP, eCommerce, and other software. They also have an advanced API that can be used to integrate with more software.
- Cloud-Based: Avalara is a software-as-a-service (SaaS) solution, so your tax software will be constantly updated to keep it accurate.
- On-Demand Reports: You can export transaction data for tax filing at any time you need to.
Their AvaTax Sales and Use Tax tool is also able to work in conjunction with their Avalara Returns, CertCapture and Licensing products so that all of your tax-related information stays synced. If you use other software for accounting, eCommerce or business management purposes, Avalara is able to integrate their AvaTax tool with them seamlessly. With that, let’s dive into integrations.
Keeping all of your business-related programs in sync with each other is vital to maintaining back-end operations like a well-oiled machine; otherwise, you run the risk of misinformation and errors. One major benefit of Avalara’s service is the ability to integrate and connect AvaTax with a long list of popular applications and software. Here’s some of the more notable integrations that you can connect with AvaTax.
Ecommerce Platforms & Marketplaces
- Intuit QuickBooks
- Oracle + Netsuite
- Microsoft Dynamics
How does 3dcart integrate with Avalara?
For many years, Avalara has partnered with 3dcart to bring easy tax compliance to eCommerce merchants. With our Avalara AvaTax app, merchants can easily integrate Avalara’s tax compliance software into their online store and start automatically calculating accurate sales taxes instantly.
To use the Avalara AvaTax app on your 3dcart store, you’ll first need to activate your Avalara account. You’ll then need to configure your account to specify which geographical areas you’ll be collecting taxes from. Once your settings have been configured, you can integrate your account with your 3dcart online store via the Modules section of your Online Store Manager.
After your AvaTax module is fully integrated, real-time tax calculations will be available immediately. Taxes are calculated by using the order information and shipping addresses involved in the transaction, which are validated behind-the-scenes by Avalara. Once Avalara has access to these factors, it’s able to display the real-time tax rate to the customer at checkout.
Customer Service & Support
When it comes to supporting their customers, Avalara offers a few different forms of contact. You can either call their support line, which is open from Monday to Friday, 8:00AM to 6:00PM, or you can live chat with them on those same days from 12:00AM to 4:00PM. There’s also a Help Center that acts as a knowledge base for their products, answering most general questions that you may have. They even offer “Avalara University,” which provides short training courses and workshops for free to help you better understand business taxes, integrating software and more.
Pros and Cons
According to Hutchinson, Avalara has “married technology and compliance better than our competition.” But, as with every software on the market, there’s positive and negative aspects. Let’s line up exactly what we feel are the best parts of Avalara’s service, and what we see as some of the lesser parts that could benefit from improvement.
- Pro: Their software automatically keeps track of up-to-date tax rates and changes your store’s rates when necessary to stay within compliance.
- Pro: Tax errors due to manual entry are effectively eliminated, meaning that customers and merchants won’t have to worry about paying or collecting the wrong tax amount.
- Pro: Transaction data and sales tax liability reports are all available to be exported at any time you need them.
- Con: Transaction limits can be low for some merchants on each plan, which has the potential to cause an account to pass the threshold and increase the price unexpectedly.
- Con: Some users report that a few integrations aren’t perfect and may need some extra adjustments to get working and synced.
- Con: Their software is more geared toward small to mid-sized businesses. (Note: Larger enterprise packages are available via quote.)
If you’re looking for a way to streamline your online store’s tax rates, then Avalara’s AvaTax software is one of the best choices that you can make. Their service is comprehensive and includes everything you’ll need to get accurate tax rates entirely automated, taking all of the work out of your hands and eliminating troublesome tax errors. Tax compliance can be a tricky thing to navigate, so it’s better to leave it to a professional rather than try to be a jack-of-all trades for your business. By utilizing Avalara, you’ll end up saving a lot of time and money that can go toward actually growing your business without the added stress of staying on good tax terms with your customers and the IRS. You can check out Avalara AvaTax in the 3dcart app store to learn more.