hey it's patti scharf CPA and co-founder of catching clouds the leader in
e-commerce accounting and I'm starting a new series today about all the different
solutions for e-commerce sellers with respect to everything else in your
business because we know that not everything has to do with accounting a
lot of business has to do with you know delivering products to customers and
things like that so I'm going to just start a series and talk about the
different things that we know all the different research we've done for our
clients and others on different things that make your business what your
business is
so today we're going to talk about sales tax tools because the that is the hot
topic from everybody if you have been living under a rock you need to go watch
these videos right here because this is like the hot topic now things are
changing fast and furiously and if you're going to be filing sales tax in
any or all States you need to get a sales tax tool to help you out so this
is what we're going to talk about today and let's get started
all right so the big three players are avalara tax jar and tax if I before we
talk about those though I want to say that there are actually two things that
we need to pay attention to one is collecting the right amount of sales tax
and the other is remitting and filing your sales tax returns after you have
your sales tax collected all right so the first thing we're going to talk
about with respect to collecting is the sales tax engines so many marketplaces
and shopping carts and all those guys they will collect sales tax for you but
some of the ones like like eBay basically they say how much sales tax
would you like us to collect and you put in a flat number like I don't know six
percent but six percent is not the sales tax rate in all of the states or all of
the counties and cities and whatnot so it's a rough estimate that allows you to
collect at least some of the sales tax but it is by no means spot-on helpful in
all situations all right there are other shopping carts that will have like a
table so maybe it'll have like a list of all the states and you can enter an
amount state-by-state it may or may not be updated for you and again it's more
helpful than not but really the most helpful thing is to get a sales tax
engine and tax chart exif i Avalara they all have a sales tax engine there are
another dozen or more companies beyond that that also do the same thing where
you basically attach it to your WordPress site woo come
Shopify whatever you have and it will calculate the sales tax for you based on
depending on the sales tax engine sometimes they'll do it based on what
the product is but certainly based on where the customer is what the rules are
for the different states and things like that
so Avalara is by far and away like the big player in that arena they've been
around like forever and they've got really good really great
information they've got lots of information on product taxability
they've got lots of information on the different rates in the different states
and jurisdictions County cities and all that so pretty much all of the shopping
carts will have a connection to a velar and in some cases it may be their only
one so like for big Commerce when you sign up to sell on big commerce they
will by default just have you on the Abelar system and you can just use
avalara for low volumes of sales once you hit a certain threshold which I
don't know what that threshold is but once you start picking up and selling in
greater volumes basically you need to sign up with Avalara and start paying
them to use their sales tax engine and they charge like on a per transaction
basis so they charge pennies or whatever every time you sell a product you're
using that sales tax engine to calculate the amount of sales tax you need to
collect you do not have to use the same sales tax engine as you are filing so
you could have Avalara calculating your sales tax and you can be filing using
texture or tax fire or something else all right so let's talk about filing
your sales tax returns like I said there are basically three big players let's
talk about Avalara first Avalara has two main products they've got ab attacks and
they've got a Valera trust file Ave attacks is really for accounting
departments for big companies that are selling all over the place it's it's
super robust like think think along the lines of Xero or QuickBooks Online
compared to NetSuite like a taxes that next sweet level of sales tax
calculations so it's super robust it's really great it comes with a big ticket
price so you can use it it's really expensive but it'll give you good
results however it does not connect to all the different shopping carts that
are out there doesn't connect to Amazon and Shopify and big commerce and Magento
and all of those so for an e-commerce seller it's expensive and it requires a
lot of manual work so it's really not playing in the same space as tech start
AXA Phi and Apple era trust files so this is why they created a bolero chest
file it's been around for a few years like four or five years about the same
as texture and toxify and a Valera trust file the the good news on that one is
that it connects to all the different shopping carts and Amazon and Shopify
Magento and all that stuff the bad news is that from a technological perspective
like from just their ability to manipulate data and things there are
quite a bit behind tax jar and taxa fide they just have never quite caught up to
them so for example like Amazon when you're pulling down information from
Amazon Amazon will keep all the addresses related to the wedding
registries and babies baby registries and things like that in its separate
database so when a Valera trust file pulls that information down it doesn't
have those addresses and so it will just assign the addresses to whatever
wherever your company is which is obviously not correct so so the accuracy
of the information you're getting out of trust file just isn't super great now
let me just say that these tools and all the tools that you see all the cloud
tools that are out there they are developing like crazy like they're just
evolving over time so anything I'm telling you today may or may not
actually be accurate like tomorrow so you need to check in with these
different companies and make sure that you that I'm giving you good information
based on what we've seen the last time we looked at Ewa Lera was about nine
months ago and every time we look at it we check it out a couple of times a year
for the past several years and it just never quite has information that's as
accurate and up-to-date as tax jar and tax Phi so honestly we don't even really
consider it as an option for our clients but I will say that as a company avalara
is really great and I mean if they could like combine Avot acts and their trust
file products together to create something really good for Amazon sellers
or you know ecommerce sellers in general it would be amazing but it's it's just
not there yet so but a velar is a company it's they they've got lots of
experience they've been around the longest they have great resources online
they've got lots of educational resources I would definitely check out
their blog so so they're great they're just not helpful
yet for e-commerce sellers in my opinion the next one I want to talk about is tax
to our tax jar is the most set and forget system of the three if you have
like a standard ecommerce business one that's just selling on Amazon or just on
Shopify or just a couple of different channels like that and you don't have
anything funky going on it's a really great tool especially I think if you
have tax jar as your sales tax engine and as your filing system because one of
the issues with tax jar is it will only file information based on the sales tax
that it calculates it's not going to file it based on what you collect so if
you're using tables or something for your sales tax engine if you're using
tables instead and you're just kind of estimating your sales tax you're not
going to be able to remit what you collected you're going to remit what you
calculate so there might be a discrepancy you might have to come out
of pocket for some of that sales tax which nobody likes to do so so that's
not ideal but it's understandable so if you have sales tax engine and the
violence being the same and it's a standard
system and you don't have anything funky like any tax-exempt stuff or product
product taxability stuff that's like products that are exempt then it's a
really good system the one other issue that we had is we have so many clients
who come to us and they're just like okay I was supposed to be filing sales
tax like six months ago or a year ago and I want to get caught up on those
let's go back in time and pay the penalties and interest and stuff tax jar
doesn't allow you to do that so if like you need to go back in time you're gonna
have to either do all that stuff by hand or whatever they they just they can't go
back there only going forward so if you're like a brand-new company and
you're like starting off clean and you're straightforward like texture is
actually a really good bang for the buck and and worth your while checking out
it's a really good company from the sense that like they they have their
finger on the pulse of both ecommerce and sales tax and they've got some great
information in their blog so I would definitely follow them at a minimum so
the last system I want to talk about is taksa fight aexif is actually the system
that we use when we were looking for a system to use like four or five years
ago they were the only ones that filed in all 50 states and they gave us PDF
copies of the returns they gave us payment confirmations I I think tax jar
does all that stuff now I think takstar just started filing in all 50 states
like last year July of 2017 I believe I could be wrong but I think I'm right but
years ago like we needed a solution right away and tax by like did all that
they're also a lot more flexible so we have a lot of clients who not only do
they sell on these different shopping carts but they may have some
business-to-business sales which are exempt from tax and we can tweak the
information based on the orders we can edit the sales tax returns themselves
before they actually get filed so they're a lot more flexible we really
care about accuracy and so we make sure that we have a system that we can kind
of jury-rigged if we need to if the data is not cooperating so so that's that's
really why we use tax fight the other thing is you can go back in time and
file historical returns so the system is really great for that so like I said
things change on a dime so check out all these different companies the prices are
pretty comparable no matter which system you use whether it's a velar trust file
tax jar or taxa Phi but they do have sliding scales based on your volume so
if you have just a little bit of volume you'll be a smaller fee if you have a
lot of volume you'll pay higher fees so you'll have to check out the pricing
based on your own personal situation that it's you can't tell like I can't
give general advice on what's most cost effective it's all kind of generally
around the same ballpark but hopefully this video helped you kind of narrow
down some of the issues that you might be having and things that you're looking
for I hope that you found this video helpful if you did please like comment
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