The global tax software market, which includes sales tax software, is growing at a CAGR of 10.6%. By 2030, the market is expected to reach USD 46.90 billion. It’s not quite as impressive as Elon Musk’s net worth yet, but it’s getting there.
That’s down to an increasingly complex tax space, especially for online businesses selling across state lines. With 43 states having economic nexus thresholds and 34 of these states setting a $100,000 sales or 200 transactions threshold, growing businesses can quickly exceed these limits.
But how do you keep track if your business can’t afford a full-time sales tax expert? Sales tax automation software. If you’re shopping around, you’ve come to the right place because we’re checking out the five features and benefits of US sales tax software that give you more for your hard-earned dollars in this blog.
What is US Sales Tax Software?
It’s an automation tool that helps your business manage its sales tax duties by calculating sales tax, generating tax returns, and tracking compliance across multiple jurisdictions – on autopilot. Sales tax software also helps your business manage tax exemptions, handle dynamic rates, and determine taxability. PS, it also provides precise reporting capabilities and an audit trail.
In short, it simplifies your duty to stay compliant in the most complex sales tax system, probably in human history. What features make this possible?
Key features of US sales tax software
We recommend software features that keep you 100% compliant with little effort.
Automated sales tax engine
Ditch the spreadsheets and pocket calculators. This feature calculates sales tax based on transaction details, including the sale location, the type of product or service sold, and any applicable exemptions. It also calculates sales tax rates, considering state, county, and city taxes and special circumstances like tax holidays and product exemptions. Lastly, the engine should be capable of dynamically tracking sales rates and compliance requirements to ensure precise calculations.
Nexus compliance management
The software tracks your sales activity against various state nexus thresholds and alerts you when your business reaches the economic nexus in a new state.
This feature is crucial if your business sells across state lines, as it efficiently identifies and manages your sales tax nexus, ensuring compliance with diverse state laws.
Reporting, exemptions, and audit-readiness
An audit can’t blindside you if your software includes exemption management, research, and reporting capabilities.
Here’s why:
- Receive real-time insights into your tax liability, exemptions, and audit risks with customizable reports and dashboards
- Organize and track exemption certificates with no effort
- Prepare for audits easily by readily accessing audit trails and documentation in a few clicks
Integration with your business systems
How will your sales tax software integrate with business systems like your ERP, accounting software, or e-commerce platform? Integration with sales tax software streamlines the tax filing process by automating sales tax calculations and reducing manual data entry, which lowers the chance of errors. This ensures efficiency and accuracy in tax return filings by utilizing real-time sales data for up-to-date tax calculations.
For this reason, look for direct integration, API integration, or third-party integration from your software. Some providers like Complyt even offer pre-built integrations with popular systems.
Five benefits of US sales tax software for your company
Forget scrambling at tax season and wrestling at midnight with complex regulations. US sales tax software offers a one-stop solution for conquering compliance and unlocking significant advantages for your business. Here’s how.
1. Complete compliance confidence
Sales and use tax software ensures compliance with complex and ever-changing tax codes, eliminating the need for spreadsheets and manual calculations. It automates calculations, tracks deadlines, and produces audit-ready reports, significantly reducing the risk of penalties and audit issues. This gives businesses the peace of mind that they are consistently tax-compliant.
2. Operational efficiency and accuracy
By integrating with your existing business systems, sales tax platforms streamline your data flow and reduce your need for manual entry. This translates into time-saving and fewer errors associated with manual data handling.
Automating your sales tax processes also helps you avoid penalties and missed deductions, leading to direct cost savings. It also sets you and your staff free to focus on higher-value tasks, boosting overall business efficiency and return on investment.
3. Centralized Management
The most popular sales tax software consolidates all your sales tax data into one single source of truth, making it easier for anyone in your organization to manage and track when needed. This centralization means you’re not juggling multiple tools or data sources, leading to better organization and oversight.
4. Strategic insights and decision making
Sales tax software offers real-time data and customizable reports, giving your business a comprehensive view of your tax obligations. This insight lets you identify optimization opportunities, forecast liabilities, and make strategic decisions to support business growth.
5. It scales as you grow
As businesses expand, sales tax software scales to accommodate new markets, locations, and increasing transaction volumes. This adaptability ensures that the tax processes align with the business’s growth trajectory, maintaining efficiency and compliance during expansion.
Choosing US sales tax software
Staying on top of sales tax is crucial for customer service and tax compliance, but it can be complex and time-consuming. That’s where sales tax software comes in. It can streamline your tax management process, saving you time and money while ensuring accuracy and compliance.
Key Takeaways
- Pricing: Set a budget and compare pricing models to find the best fit for your needs
- Ease of use: Look for sales tax return software with an interface and navigation that’s intuitive to you
- Software integration: Ensure the software seamlessly integrates with your existing accounting or ERP systems
- Customer service: Reliable support is essential for troubleshooting and answering any questions you may have
- Scalability: Choose a solution able to grow with your business and accommodate any increases in transaction volume and complexity
Beyond basic tax calculations, look for sales tax calculation software that offers additional features to simplify your tax workflow:
- Automated data recording and submission: Save time by minimizing manual data entry and automating tax filings
- Real-time reporting and insights: Gain instant visibility into your tax liability and compliance status
- Nexus management and tracking: Ensure you comply with tax regulations in all relevant jurisdictions
- Audit-ready reports: Generate comprehensive reports to simplify audits and compliance checks
Your Complyt US sales tax solution
Complyt helps businesses maintain compliance, streamline their tax processes, and improve their efficiency and accuracy in tax calculations and filings. Book your free demo today to see how Complyt puts all of the features above into action to transform your business’s tax management experience.
