What is Avalara and what can it do for your eCommerce business?
For any organization, ensuring that tax rates are precise can be challenging. The process can come to be a whole lot more challenging for eCommerce businesses.
This is especially true because your online shop is most likely marketed to consumers all over the world. And every different area has various tax rules; even addresses within the exact same zip code can be based on completely varied tax rates.
In addition to that, some of your products may be taxable and others non-taxable; things such as apparel or food. And these tax laws differ from state to state.
Because of this, it can take hours of work and thousands of dollars investment doing things such as:
- Setting up, by hand, each tax rate and constantly keeping them up to date
- Manually keeping track of all transactions, including filing them
With a manual approach, even an incredibly astute business owner will run into unexpected reporting errors. When that happens, you’re not only throwing a wrench in your tax returns, but you may be subject to an audit.
What is Avalara?
As a major solution to this obvious problem, you can integrate Avalara’s tax compliance software into your eCommerce business. AvaTax from Avalara was designed to help streamline the whole process, from your shopping cart to your tax return.
Avalara was founded by Rory Rawlings in 2004. It’s a powerful software solution for small to mid-sized businesses that automate sales tax compliance.
Rawlings began Avalara when he understood that clients needed more affordable and efficient ways to manage, calculate and remit use and sales tax. At the time, all of the existing methods were time-consuming, cumbersome, and prone to human error.
When the seeds for the new company called Avalara were planted, it quickly became clear that there was an entire industry in need of a software service such as AvaTax.
Their new software was the end-to-end solution so many business owners were looking for, including:
- Tax calculation and filing
- Business owner’s exemption certificate management
Located in Seattle, WA, the Avalara tax solution currently services over 20,000 small to mid-sized businesses throughout the world. Its users are found in over 190 countries.
How Much Does Avalara Cost?
Avalara boasts an impressive lineup of tax-related services. AvaTax, however, is their flagship software product.
To use this software, you’ll need to select between several different plans that vary in cost and transaction limits.
- Standard: 250 transactions for $50/year
- Plus: 500 transactions for $95/year
- Premium: 1,500 transactions for $200/year
- Enterprise: Contact an Avalara representative for a personal quote
Keep in mind that the pricing is based on volume, which means the software is designed to grow and scale with your business, no matter how big or small of an eCommerce business you’re running.
Additionally, they offer a free trial for 60 days. This allows you to see how it’ll work in your business before making an investment.
It’s also important to note that Avalara’s products are cloud-based. You won’t need to install any programs to use their solutions.
You’ll simply access them from your preferred web browser.
Avalara products also integrate with nearly any other service, either with its built-in tools or via open API. More on that in a bit.
How Exactly Does Avalara Work?
AvaTax is sub-second fast and highly reliable. It supports a very high level of user conversion. But how does it do this?
Use and Sales Tax Features
1. AvaTax has automated calculations that calculate accurate tax rates, including VAT (Value Added Tax) rates. It does it in real-time and automatically populates the correct tax amount in your customer’s invoice or the shopping cart at time of purchase.
2. It uses geospatial locations rather than zip codes. This maps the correct rate to the exact location of the customer, even within a specific zip code.
3. AvaTax will automatically keep track of tax holidays and tax rate changes. It will then update your online store in real-time to reflect the changes.
4. Avalara is a state-approved service provider (CSP) for providing returns preparation, sales tax calculations, and filing in 24 US states.
5. There are more than 700 integrations pre-built into the software. Avalara will support full integrations with nearly all of the top eCommerce and software providers. Additionally, their advanced API will integrate with other software solutions that don’t have pre-built integrations included.
6. As a cloud-based, software-as-a-service (SaaS) solution, the Avalara software is updated constantly to make sure it’s accurate at all times.
7. You’ll be able to export on-demand reports and transaction data any time you need them.
What’s best, the AvaTax Sales and Use Tax tool will work in perfect conjunction with Avalara’s other tools, like CertCapture (AvaCert), AvaReturns, and additional Licensing products.
This means that all of your key tax-related info will be perfectly synced in real-time. Even if you’re using other accounting software, business management tools, or eCommerce tax solutions, Avalara will seamlessly integrate.
Now, let’s look at the integrations.
It’s important to keep all business-related programs synced if your back-end operations are going to work like the well-oiled machine they can be. If everything is synced, you will quickly come across errors and misinformation and get them corrected immediately.
One of the biggest benefits of Avalara is that you can integrate their software solution with an extensive list of popular software applications.
Some of the most popular ones include:
- Intuit QuickBooks
- Oracle and Netsuite
- Microsoft Dynamics
Of course, this is by no means an exhaustive list. There are many, many more.
Avalara Support and Customer Service
Avalara offers a few different ways to get support or customer service when you need it.
First, you can give the Avalara Support Line a call at their designated hours. You can also live chat with them or access their knowledge base at any time.
In addition, they offer a service named Avalara University. There, they provide short workshops and courses for free to help customers gain a better understanding of business taxes and how to integrate Avalara software solutions.
Pros and Cons of Avalara
In many ways, Avalara has figured out how to marry compliance and technology better than most of its competitors. However, as with any other product on the market, there are both positive and negative variables to consider.
- The software keeps your eCommerce store in tax compliance by automatically keeping track of up-to-date location-based tax rates, then changes the rates in your store accordingly
- No more manual tax errors. This means that merchants and customers don’t need to worry about collecting or paying incorrect tax amounts
- Sales tax liability and transaction data reports are available for export at any moment
However, there are a few cons.
- A percentage of users have reported that a few of the integrations aren’t working perfectly and require adjustments
- The software is mostly tailored toward small to mid-sized businesses, although enterprise packages are available with a quote
However, Avalara makes constant updates and upgrades to their software to address the concerns of their users. Issues that cause problems today may be rectified tomorrow.
What Is Avalara and Is It Worth Using? The Final Verdict
If you’re a business owner or manager looking for a streamlined way to handle your eCommerce store’s tax rates, Avalara’s software is a very solid solution. The service is very comprehensive and includes all the tools you’ll require to get completely automated, accurate tax rates.
As you well know, complying with tax laws can be a tricky world to navigate. It’s also a part of your business that’s best left to the professionals.
By using Avalara as a solution, you’ll find that you have a lot more time and money to put toward growing your eCommerce business, rather than making sure it’s tax compliant.